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GOMITATO SCIENTIFICO
t CESARE COSCI ANI - ENRICO DE MITA - ANDREA FEDELE FRANCESCO FORTE - FRANCO GALLO - IGNAZIO MANZONI GIANNINO PARRAVICINI - ALDO SCOTTO - SERGIO STEVE
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D I R E Z I O N E
ENRICO ALLORIO - EMILIO GERELLI
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Amedeo Fossati - On the Harmonization of the Public Expenditure in Federal & Unitary S t a t e ... 3 Alberto Majocchi - Le procedure della programmazione e il Senato
delle r e g i o n i ... ... . 27 Raffaello Braccini - Le società di comodo nella recente legislazione
t r i b u t a r i a ...47
Francesco Tesauro - L ’onere della prova nel processo tributario . . . 77 RECENSIONI
Giampietro F. e P. - Rassegna critica di giurisprudenza sulVinquina-mento delle acqtie e del suolo ( A .R .M .) ... i)l
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ISTITUTO DI STUDI SULLE REGIONI CONSIGLIO NAZIONALE DELLE RICERCHE
ISABELLA PIERANTONI
ANALISI ECONOMICA
DELLA VITA UMANA
Valutazione di un bene « intangibile » nell’analisi costi-benefici
Questo studio si inserisce nelTambito di una ricerca sull’analisi costi-benefici nel settore sanitario promossa dall’autore e costi tuisce un primo elaborato sul problema della valutazione econo mica della vita umana.
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La necessità di avere una tecnica o degli strumenti per selezio nare le scelte pubbliche risponde quindi ad una duplice esigenza. La prima è simile a quella di qualsiasi decisore il quale necessita di regole che diano una razionalità alle sue scelte.
La seconda è peculiare per il decisore pubblico poiché implica che questi consideri tutti i costi e i benefici sociali, non solo quelli finanziari, e che le decisioni siano razionali non solo per il sin golo decisore ma per tutti i livelli istituzionali che partecipano al processo decisionale.
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Parte terza:
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79
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A UNA SVOLTA
CRITICA
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71
un insostituibile strumento di consultazione per l’amministratore e per l’operatore giuridico
LUCIANO ZANOBINI
REPERTORIO AMMINISTRATIVO
DELLO STATO
Il Repertorio costituisce il più aggiornato, completo e organico testo di consultazione e documentazione della legislazione amministrativa italiana, integrato con la costante interpretazione giurisprudenziale e la più qualificata dottrina.
L’opera, a schede, è suddivisa in trentacinque grandi voci che abbrac ciano tutte le materie e le funzioni amministrative dell’ordinamento vigente, dal Commercio all’Amministrazione locale, dalla Difesa alla Giustizia Amministrativa, all’Urbanistica. Ogni grande voce tiene poi debito conto del complesso intreccio di norme e^ rapporti con gli isti tuti (civili, sociali, economici, penalistici, ecc.) ricompresi nella Costi tuzione, nelle leggi ordinarie e nei settori organici amministrativi at tualmente disciplinati dalle norme sui trasferimenti e sulle deleghe delle funzioni amministrative.
Nell’ambito di ciascuna grande voce sono quindi esposti, raggruppati in sottovoci, i principali testi normativi sull’argomento trattato, che forniscono un quadro completo ed equilibrato della complessa
nor-mativa. . . ,
Ogni testo normativo sul quale si siano avute importanti e costanti de cisioni è corredato della relativa giurisprudenza esposta cronologica mente e dotata di un indice per articoli.
Sono inoltre attentamente poste in luce le prevalenti linee interpreta tive, non trascurando gli orientamenti diversi, anche di giudici di prima
istanza, meritevoli di segnalazione. _
La bibliografia esposta alla fine di ogni grande voce costituisce il piu ampio panorama dottrinario sulla materia trattata e privilegia le opere e gli orientamenti di particolare importanza che hanno, in varia parte, influenzato la giurisprudenza.
Le indicazioni bibliografiche sono raccolte per argomenti, in corrispon denza a quelli delle parti legislative e giurisprudenziali.
Si tratta, dunque, di un’opera assolutamente nuova, che unisce ad un alto impegno un’elevata utilità pratica, e che si propone come un in sostituibile strumento di consultazione.
423
SOMMARIO:
Parte I - I PRINCIPI
La Costituzione - Le fonti del diritto. Parte II - L’ORGANIZZAZIONE
L’amministrazione centrale - L’amministrazione locale - Gli im piegati.
Parte III I MEZZI. LA POPOLAZIONE. LA GIUSTIZIA AMMINISTRA- TIVA
I beni - La finanza - La popolazione - La sicurezza pubblica - La giustizia amministrativa.
Parte IV - I SERVIZI SOCIALI
L’assistenza sociale - La sanità - L’istruzione - La cultura - Le attività ricreative, turismo - I servizi pubblici, trasporti - Il lavoro - L’artigianato - Il commercio - L’industria - La cooperazione - Il credito e il risparmio - Le assicurazioni.
Parte V - ASSETTO ED UTILIZZAZIONE DEL TERRITORIO
L’agricoltura, le foreste e la zootecnia - I territori e le comunità montane - La caccia - La pesca - L’urbanistica - L’edilizia - Le occupazioni d’urgenza, requisizioni ed espropriazioni per pubblica utilità - I lavori pubblici.
Parte VI - PROGRAMMAZIONE E PARTECIPAZIONI La programmazione - Le partecipazioni statali. Parte VII - AFFARI ESTERI E DIFESA
Gli esteri - La difesa.
Indici - Analitico - Cronologico - Numerico.
L’opera, aggiornata al 31 dicembre 1984, è costituita da circa 14.000 schede in ventuno raccoglitori con custodia, rilegati in tela con sovrastampa in oro, ed è in vendita al prezzo comples sivo di L. 2.400.000.
Aggiornamento 1983
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_________________________________________ 424
Giuseppe Giuliani
VIOLAZIONI
E SANZIONI
DELLE LEGGI
TRIBUTARIE
Terza edizione rifatta
PARTE GENERALE
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PARTE SPECIALE
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IN FEDERAL & UNITARY STATES (*)
1. Introductory remarks.
The problem of harmonization doesn’t logically seem separable from the general problems of the public expenditure, that is from those of its qualitative articulation and of its quantitative develop ment. The harmonization seems simply a specific dimension of the expenditure and therefore, the explanation of such dimension cannot but be closely related to all of the other dimensions (1). The endeavour to explain singly an aspect (the harmonization) may seem a simplification, but it involves costs in terms of rigour and therefore margins more or less ample of errors. Such margin of error is so much the more ample as the less the harmonization is determinant in respects of the other components of the particular type of public expenditure being considered. In general, therefore, it seems necessary to study the problem in a general light and that is with models of general equilibrium.
On the concept of harmonization being used here, it seems sufficient to determine the point that to harmonize doesn’t mean to equalize. Rather, in fact, it is a matter of « uniform ity», or that is to say, of equivalence under the same conditions: for example, the expenditure for elementary education is not the same in absolute terms in the various scholastic districts because this depends on the number of children which attend school.
(*) This paper was submitted to the Italian-Canadian seminar at Villa Colombella (Perugia) in September 1981t. I particularly thank professors A. Pedone and G. Galeotti for their helpful comments.
The equality of conditions, therefore, often implies a substantial difference in absolute terms of public expenditure; the latter is in fact a quantitative-monetary dimension of the pubblic intervention directed to the achievement of a certain objective, whilst the achievement of a given level of an objective implies in different circumstances different amounts of public expenditure. Consequently, it would be necessary to consider the harmonization of the levels of achievement of the public objectives and not the armonization of the public expenditure, inasmuch as the conditions of cost or of efficiency are not generally identical.
The direct consideration of the public objectives permits one to distinguish between the harmonization understood as par conditio (which is a characteristic ideally implicit in every type of general public expenditure), and the harmonization understood, as a remedy to an initial situation of inequality of the market. In this latter case, the objective of a special public expenditure is to modify a characteristic of the social economic system not considered as being satisfactory. In this regard, the typical objective is to obviate a certain form of « disequilibrium»: for example, the territorial economic disequilibrium between developed regions and those that are under-developed.
From the point of view of the traditional theory, these two types of harmonization should be considered distinctly because whilst the first type derives from « internal» characteristics to the phenomenon considered (for example, problematic of public goods) the second type derives from the value judgments assumed externally. In this note, nevertheless, an attempt will be made to lay-out a model that (even though in a very simplified form) will be able to account for both types of harmonization mentioned above in a unitary manner.
With regard to the influence exerted on the level of harmonization from the different statutory structures, it seems appropriate, first of all, to distinguish the Community States from the other States (unitary and federal). The best known comunity state (or maybe the only one?), is the EEC, which seems rather still a non-state, for the greater part involved with the maintenance of the agricultural income in its member states, and consequently it doesn’t seem very interesting from the point of view of this paper.
consideration of the respective « Constitutional Documents », which assign the various competences in respect of the level of government. In fact, it may seem that the Constitutions of the unitary States reserve a position which is hierarchically superior to the central Governments and, in particular, strictly regulate the functions that are reserved at inferior levels of Government : in such manner it would seem very natural that the new public wants be easily appropriated by the central Government.
On the contrary, the Constitutions of the federal States would worry above all to define and limit the functions of the federal Government which would thus have difficulty in extending its own jurisdictions while the new public wants would be appropriated directly by the member States and therefore by the local Governments.
On the grounds of such foundation, it would follow that the level of harmonization obtained in the unitary States be greater than that of the federal States. In fact, ceteris paribus, one can reasonably expect that the differences increase with the dimensions of the social group, and consequently that the harmonization effort (of both the first and second type) be greater in the unitary state which presents larger dimensions in respect to the individual federal states. Nevertheless, such foundation seems excessively formal : the statutory structure more than to shape and control the exact relations among the different levels of governments, represents one of the elements and not necessarily the most important one. The actual relations between the various local communities and the central authority are continuously modified, by either direct amendments to the Constitutions, or (more often) by means of evolutive interpretations of the constitutional law. At last, a part which is probably very important in the mutations of the above mentioned relations is also accomplished by the mere behaviour of the executives and of the bureaucracy.
It seems feasible for now to conclude that the harmonization policies (as the other aspects of public policies) answer at least in part to the demands which are common to all types of states; such demand would be for the greater part then determined (in the western democracies) by the dynamics of the capitalistic way of production, and by the parallel cultural development, which is very sensitive to international demonstration effects.
itself of the public local service (and therefore, the level of harmonization also of the first type). For example, the public elementary education is considered as a typical central national service in the unitary states, but is generally a local service in the federal states.
Finally, it might seem that the theory of fiscal federalism is able to suggest some hints in order to explain the problem of harmonization in respect of the different types of state. However, a careful inspection evidences that the theory doesn’t leave much room for the problems of harmonization and the reason is that its core seeks points of paretian equilibrium, basing itself on indvidual functions of utility (2). In the case that such equilibriums are achieved, every interference (harmonization) causes a loss of welfare. If not, harmonization dissolves itself into the measures to reach equilibrium. It is, therefore, evident that harmonization is not a problem in the schemes of paretian optimum; it becomes important when the public authority makes some choices which entail judgments in value. Now, it is true that some value judgements are embedded in the theory of fiscal federalism (as an example, merit wants), but they are couched from the outside and do not play any substantial role in the core of the theory of fiscal federalism. Thus, the conclusion is that we have better leave the theory of fiscal federalism aside and look for more helpful foundations.
2. A model of behaviour of the political classes.
Let us suppose the consideration of a population which is divided into local communities with local governments and a central govern ment. Eeaeh level of government furnishes a mix of public goods and transfers, respectively of local and central interest (however defined), the cost of which is shared among the individuals by means of taxes. Each local community differs in tastes, in dimensions and in inter-relations between the central/local political classes. The latter may he defined here as areas of political consensus to which single public decision makers belong.
Each individual participates in the political decisions by voting separately for the two levels of government. The public decision
makers ,or politicians) share the cost of their activity with the principle of fiscal equity and, in particular, according to the ability- to-pay (income, patrimony and consumption).
Their behaviour is patterned to execute public choices in their own interest, at least as far as the expenditure decisions are concerned; however, their behaviour reflects the interest of the political class to which they belong.
The choices which are carried out are only incremental(3), either as level of output or as new services supplied to the community. The interest of the politicians is suject to, however, some constraint and substantially that is to pass the next electoral te st: for as they won the last elections, they must now keep their own electorate by incrementing the expenditures/public services, taking also into account the fiscal burden in such a way as to preserve the votes or to augment them. The political classes can, for this purpose, manipulate information in such way as to have influence on the decisions of the electorate.
There exists particular relations between the central politicians and the local ones, either at institutional level or by means of ad hoc agreements; their behaviour is also influenced by exogenous variables (international events, natural calamities, economic and cultural expansion in general) which influence directly on the behaviour of the individuals (4).
The behaviour of the individuals, in regard to their attitude towards the politicians and the political classes appears to be relatively very little motivated. They may be getting utility from some services out of the supplied set of public services, but often they don’t really realize it — at least not as long as the public services continue to be supplied. The supply of such public services is then an integral part of the environment in which they liv e : only if they would no longer have those services, could they concretely manifest their feelings (consolidation of wants) (5).
Individuals are, on the contrary, relatively sensitive to the fiscal burden but above all to the variations in the burden. In this
(3) The incremental form models are now fairly common in the literature; perhaps it may be of interest to note that one of the first hints is to be found in De Vrri-DE Maboo, p. 120.
(4) See below where an attempt is made in order to suggest a more realistic approach to the vote constraint.
case also, the fiscal drawing is part of the environment in which they liv e : in this instance it regards a « wrong » that within very large margins, they are brought to consider it as being necessary. The increase, to a great extent, passes unobserved at least if the national income (and therefore individual) rises; the tolerance of the fiscal burden can reach dangerous levels particularly when it slows down (or compromises) the growth of the income.
At election time the alternatives are either the confirmation of the retiring politicians or their substitution by rival politicians; the element of judgment is the information at the disposal of the electorate not so much on the programmes, the objectives or the supply of public services and the relative distribution of the cost on each individual, but on the opportunity of changing the political class in power. In normal circumstances the average voter prefers the solution of continuity inasmuch as he has a certain aversion towards risk. In the short run the voter is strongly subjected to the manipulation of information and is sensitive, therefore, to « scandals » and other events and tends to attribute to the politicians and to the relative political class, in good and bad, all of the incidents which regard it in relation to the environment. This attitude is not entirely irrational inasmuch as voting is the only instrument of which an individual disposes in order to change the environment in which he lives (6).
A simple scheme of behaviour for the politicians can therefore be synthesized as follows (7): Max P = F (81, $2, . . . , S n) subject to: (1) E 8 t - T i * = 0 V = S <?, (Si) + G ( T ) ^ 0; 8 V > 0, 8 V T r < o
(6) With the passing of time, the voter is conditioned by the development of the culture in a broad sense, which, in turn, is a product o f variables that are out of the control of the political classes. Actually, the latter are rather for a great part determined out of changes in the state ot the
where it is:
P the increase of power or utility of the politicians; Si the increase in the i - th public expenditure; T increase in taxation;
V increase in the vote potential.
Setting the Lagrangean
L = P - X {2 St - T} - co {2 G( + G} one obtains the n — 1 conditions:
8 P 8 G{ 8 G --- — — H---8 St 8 Si 8 T (2) —----— = --- --- ; 8 P 8 Gn i 8 G 8 S n 8 Sn + ~8T
wich can be interpreted as the equality of the marginal rates of substitution between two public expenditures respectively in regard to the « power » and to the « votes ».
Such general scheme may indifferently interpret the behaviour of the local politicians and that of the central ones; to verify differences in behaviour, it is necessary to specificate more accurately the model.
With this intention it. may be useful to consider that (2) are also valid for the problem
Max V = S Gt (S^ + G (T )
subject to:
(3) Z S i - T = 0
P = F ( S i , . . . , S n) ^ 0
« power » in respect to that attributed to the « votes » and that — in all being equal — the greater power implies a bigger expenditure.
This last observation is not surprising, at least in the sense that a politician who is trying to interpret the will of the voters (and not his own) should take the decisions which maximize their electoral votes (8).
At this point it could be observed that the politicians have at their disposal, other than the public expenditure, also other instru ments for controlling votes and maximizing their own power: these are regulating instruments such as laws and administrative acts. Such instruments could be more powerfully used by the central politicians whilst the local public expenditures could be closer to the sensitiveness of the voters. In such case it could be reasonable to assume that each politician selectively uses the most powerful instrument in respect of the two objectives (votes and power). Limiting ourselves to observe the behaviour 'as to the expenditure, it would then appear that the local politicians would tend to maximize the expenditure more than the central ones. In the previous graph, therefore, the point of equilibrium would tend to be nearer
to V — 0 for the local politicians and to V — max for the central ones, always on the curve In what is to follow, in order to simplify the matter, the public expenditure will, nevertheless, be the only instrument considered (9).
This simple scheme can obviously be perfectioned: a more realistic relation of the vote could be, for example
v = S Gt (Qi) + 0 (T/Y) + 4> ( I \ , I \ , . . r r ; K , , E , , . . K,) where it is
Qi = U ( S i, B)
the increment in the quantity of the j-th public good furnished and
B = X ( i \ , r 2 , . . r r)
the intervention of the bureaucracy, whilst the variables T represent parameters controlled by the politicians (for example: mass-media, relations with political classes, relations with the members of Parliament, etc.) and finally the variables K represent parameters which are not influenced by the politicians (for example: over national or international demonstration effects, political scandals, earthquakes, floods, behaviour of the oppositions, etc.); and lastly Y the rise in national income.
Furthermore, we can suppose that not all the 8- directly increase the power of the politicians, that a part of the 8 t are exclusively directed to influence the variables T, and in conclusion that only a part of the are transformed into Qi, the rest being of economic nature of transfers.
We can maybe later on come back to such aspects; for now it seems more important to dwell on the relationships between the behaviour of the local governments and that of the central govern ments, particularly in order to display the problem of harmonization of the expenditure, as well as the differences in this regard between the federal and unitary states.
With this intention, it seems possible to state that the relation ships between the local politicians and the central ones are, in all
types of state, substantially based on grounds of mutual consent and contractual ties. The paradigm which comes to mind is the bilateral monopoly or the oligopoly, both forms of market un determined economically and based on the contractual power of the parties.
The casuistry of the relationships (of conflict and of collabora tion) between the central and local politicians can be very vast and likewise complicated by the dialectics between the political class in power and the class in opposition (10), let alone from eventual nationalist vendications in a unitary state. Nevertheless, it seems possible to advance some hypotheses which are fairly general.
The basic hypothesis is that the local politicians sell local freedom in exchange of monetary transfers whilst the central politicians buy local freedom inasmuch as this means increasing their power.
From the point of view of the local politicians, it can be observed that they can’t much perceive the lessening of freedom if they induce the central government to do what they want in terms of destination of the transferred funds, that is to say of the local public expenditure. The ideal from their point of view would be unconditioned transfers and also guaranteed for the future, because this would allow to fully exploit the shifting of V = 0 and therefore to greater maximize the local power. The transfers from the center, in fact, allow to increase the local expenditure without the negative repercussions in terms of electoral votes.
From the point of view of the central politicians, the transfers (finalized and/or unconditioned) imply, in general, a greater control on the local political classes, and therefore in conclusion, a greater « power »; this appears, nevertheless, balanced by the loss in votes as a result of the increase in taxation necessary to finance the transfers.
The terms of trade are generally determined by the contractual power of the politicians; the latter, in turn, depends heavily on the statutory structure of the State. Actually, it seems that the contractual power of the local politicians is much stronger in the federal State than in the unitary State (11).
(10) For example, a political party can be in the central government and in opposition at local level, or viceversa.
The negotiation can take place between the central politicians and a block of local politicians : this depends on the particular inter-relations existing among them. Nontheless, it seems possible to assume that the objectives of the individual local politicians are partially different, even in order of priority. In such instance the negotiantions should take place separately, also because often it can descend from a preferential relationship between that paiticulai local class and the central class.
Nevertheless, it is possible that a certain transaction agreed upon with only one local government be later on extended also to the other local entities because we can assume that there exists a principle of horizontal equity as to the various local communities. It is, however, evident that it is not the same thing to finance the construction of public pools in a desert community as in a seaside community.
Furthermore, we can also suppose that a certain transaction agreed upon with a certain local government generates some demonstration effects for what concerns other transactions with other local entities.
With regard to the various circumstances which have influence on the transactions, it seems opportune to recall at least here :
a) the degree of differentiation between local political classes and central classes : in Italy, for example, such classes tend to get mixed-up (12) ;
b) the degree of financial autonomy enjoyed by the local govern ments, either from the point of view of the fiscal resources, or that of the possibility of resorting to running into debt (13);
(12) It seems sufficient to remember that the border-line cases can be either the total diversification between the local political class and the central one. or the perfect identity. In Italy, for example, the actual situation is very close to the identity; nevertheless in the self-governing Province of Bolzano (Bozen) we have a case of perfect diversification, and this fact doesn’t prevent a series of relations between tbe local and the central political classes: for instance the German speaking representatives in the National Parliament do support the coalition of parties in the central Government.
e) the different statutory structure with particular reference to the unitary States and federal States, and to the particularities provided for by the « Constitutional Documents »;
d) the culture, in a broad sense, of the different communities and particularly the level of industrial development, of the national income and the degree of international openness not only of the economy but of all the aspects of culture (14).
3. The model in the unitary state.
3.1. The relevant assumptions.
1. The operative « space» (quality of public expenditure) of the LP is limited by formal bonds, which the LP (local politicians) themselves try to avoid; on the contrary, the « space » of the CP (central politicians) is relatively unlimited.
2. The LP have limited fiscal resources and of indebtedness; instead the CP have at their disposal the most remunerative taxable standard.
3. There exists strong ties between the CP and the LP which heavily condition the freedom of action of the LP. The voters, in turn, distinguish poorly the local elections from the central ones; this fact may justify the inclusion of the transfers in the vote contraint for the CP.
4. The CP consider the expenditure as an instrument of power, either exercised directly or by means of an intermediation by the L P : for this reason the transfers are inserted as arguments of the function P of the CP.
5. The negotiation between the LP and the central ones is convenient to both because: i) the LP acquire power in the operative decisions with no correspondent loss of votes, since the expenditures are financed with the transfers; ii) the CP balance the increase in votes
the local governments, then, played an inevitable role which was very important for the development of « trade» between the central politicians and the local ones (cfr. the Hevenue sharing in USA), and as a consequence also for the theoretical interest for the problem of harmonization.
correspondent to the transfers and the increase in power in respect of the LP with the loss of votes due to the taxation relative to the financing of the transfers.
The exchange between the LP and the CP of local autonomy against transfer outlays can be rendered in a simple manner by the familiar box-diagram where on the abscissa are indicated the transfers from the central government to the j-th local government, and on the ordinate a conventional measure of the contraints to which the same j-th local government submits itself to.
3.2. A simple analytical model.
Central Politicians
Max P = F (E; P , . . . , P , . . . , P ; A 1, . . . , A \ ...", A')
subject to:
V = G (E) + .S W (P) + 9 (T) = 0 E + 2 P =. T.
where the central public expenditure is E, and S’ the expenditure of the j-th local government; I> is the transfers from the central government to the j-th local government, and A ’ a quantitative index of the autonomy « marketable » from the j-th local government to the central politicians.
Setting, for example, the Lagrangean (15):
L = P — 2 P (P} — P>) — 2 P (Gi + gi) —
- S p* (Si - P - T>) - oc (<? + 2 Q i + g ) - $ ( E + 2 P - T)
one obtains the s conditions of equilibrium
8 V _L 8 V 8 Vi 8 P ’ 8 P 8 P 8 T r 8 P 8 Ti 8 S1 8 P 8 E 8 V 4- 8 V 8 Vi 4- 8 Vi 8 T 8 E 8 T’ 8 Si 8 P 8 P i 7 = 1 , 2 , 8 A ’ 8 A ’
which can be interpreted as the equality of the marginal rates of substitution between the j-th transfer I ’ and the j-th index of autonomy A 1 in regard to the central politicians and to the j-th local politicians (16).
(15) In the text, the Langrangean is set so to maximise P (central politicians) subject to maintaing all other P ’ on the same le v el; of course, the identical conditions of equilibrium could be obtained maximising any other PK
(16) The conditions of equilibrium are not able to determine a unique point of equilibrium. However, it is possible to reach a unique point of efficient equilibrium assuming (like in the Lmdhal’s public good model) that the parties behave taking as a constant the price of A’ in terms of IK In fact, assuming s relations (A< = ^ Ii), where it’ is the price, and maximising each P 1 and P for
iz1-4. The model in the federal state.
4.1. The relevant assumptions.
1. The operative space of the LP is very ample and tends to allow for whatever type of expenditure, which is not reserved for the federal state. In contrast, the space of the CP is formally limited to the jurisdictions as provided for in the « Federative P a c t».
2. The resources at disposal of both the CP and of the LP are not substantially different from those in the unitary state.
3. There exist ties between the LP and the CP which aren’t however as close as those in the unitary state. The voters clearly distinguish the federal elections from the local elections: for this reason the transfers to the local government do not. appear in the CP vote constraint.
4. The CP consider the expenditure as an instrument of power; unlike the unitary state, however, the transfers to the local govern ments do not have any direct influence in the function P of the CP. 5. Negotiations between OP. and LP take place for the same stimuli mentioned above, for the unitary state; in the federal state, however, th.e contractual strenght is better well-balanced, and even in favour of the local politicians.
4.2. A simple analytical model.
In the federal state, a simplified scheme could then be:
With the assumption that P is maximised subject to maintaining all the p i — pi , the Lagrangean i s :
L = P - 2 X’ (Pi - P i ) - E a * + gi)
-- 2 p (Si - V - T>) - a (G + g) - p (E+ 2 V - T) and the conditions of equilibrium are:
8 P 8 V J J ~ f ¥ J v 8~V Ï E + J t 8 P d Ai 8 Pi 8 Vi 8 Si 8 Ti d f i 8 Vi 8 Si + 8 T i * 8 8 Pi t 8 Ai j = 1, 2,
One easily notes that there do not appear to be any differences for what regards the LP in the federal state in respect of the unitary state. On the contrary, for what concerns the CP, in the federal state the function P is different because it reasonably doesn’t include the I’. Furthermore, the contraints relative to the votes are also different, because the /' are not included in the constraint of the federal state, according to what was observed above (17).
Consequently, also the conditions of equilibrium remain varied for the sole central politicians.
5. Federal and unitary states: a comparison.
5.1. Statements concerning the central expenditure.
In what is to follow, the further simplifying hypotheses are assumed : i) only the total amounts of expenditures and of transfers are considered ; ii) Vu will stand for the comprehensive vote constraint of the unitary state (18), and Vf for the correspondent constraint of
(17) See above, in particular § 4.1 point 4 and § 3.1* point 5.
the federal state. It is not possible, in general, to make statements about the central spending in so far as the boundary fVu may all lie externally in the space (E, 7) to the boundary V1, but it is possible that 7 “ not be all external to V1. I t depends, ceteris paribus, on the slope of the function 0{I), in the sense that if the latter is such as to have zero value for a certain (7°), and that (7°) is lower than the maximum possible 7 as far as the federal state is concerned, than the last portion of Vf lies externally to 7 “.
However, if 7 “ is all external to Vf, then it is possible to make a tentative statement.
For 7 “, V1 as number of votes in the unitary and in the federal states, respectively, according with what was previously said it results that:
Vu — G (E) + 0 (I) + g (T); 7 ' = G (E) + g (T); T — E + I.
Then 7 “ — Vf = G (7) j> 0 for G (I) i> 0 and the same values for (E,I).
This means that for all the possible couples (E, I) and for G (7) ^ 0 the number of votes in the unitary State is higher (ceteris paribus) than the corresponding number of votes in the federal State.
It follows that the boundary 7 “ = G (E) + G (7) + g {T) = 0 in the space E, I lies externally to the corresponding Vf — G (E) + -f g (T) = 0, but they have in common the initial point for 7 = 0.
Along the boundary >Vf — 0 the point (1) is such as to maximise public expenditure, i.e. (E + 1), in so far as the derivative of the boundary has the value of (— 1) (19). Then it follows that the public expenditure is higher along the Vu = 0 for all of the shaded points, if compared with the ( E + I) corresponding to the point (1) on the boundary Vf = 0.
If the point of equilibrium for the Federal State does not correspond to the maximum (E + 1), as usual, the portion of the Vu = 0 for wich unitary expenditure is higher, is still enlarged. In the graph, if the point of equilibrium is point (2) or point (3) the portion of Vu, corresponding to a (E + 1) larger than the public expenditure of point (2) or point (3), is amplified in the direction of the arrow up to point (4). As long as G{I) > 0 in conclusion, even if it is possible that, caeteris paribus, the point of equilibrium is such that the (E + I) is higher in the federal state than in the unitary state because it depends on the slope of the P function too, it is likely that the public expenditure of the unitary state is higher than the expenditure the federal state, because it seems that quite a large portion of the Vu > O involves a higher expenditure.
5.2. A Statement about transfer outlays (I) for G{I) > 0.
Since the function P in the unitary state depends on the values of I as well, while in the federal state it just depends on E and A, one might perhaps expect that transfer outlays I be higher (ceteris paribus) in the unitary state.
Actually it is not s o : even if the total amount [E + 1) is higher in the unitary state, the value for I in the unitary state may be higher, equal or lower than the correspondig value (caeteris paribus) in the federal state.
For ( ? (/)> 0 we showed above that the boundary Vu = 0 lies externally in the space (E , I) with respect to the corresponding boundary Vf = O for the federal state, except for the point 1 = 0 . It is easy to realise that the slope of the boundary Vu = 0 may be = , > or < than the corresponding slope of the boundary Vf = 0 for the same value of I. So, even if the slope of the function P is
always constant in the space (E, I) (20), it is possible that I u be higher, equal or lower than P ; in the special case just mentioned, all we can state is that it must be (dE/ dI) u = — fc < — l v = (dE/ dl)f.
A numerical example is illustrated in the following graph, where it i s :
7« = (30 E - 1.5 E2) + (15 / - 0.5 P) - 0.1 (E + I)2 Vf = (30 E - 1.5 E2) - 0-.1 (E + I)2
P “ = flsE + H + c l ; P f = a E + c A ; A = ix I ; 7 i = l
For o = 8, 6 = 1, e = 4 tht* resulting points of equilibrium are for 1“ < P, where the slopes are (— 5/8) for the unitary state and (— 1/2) for the federal state. On the contrary, with a = 6 = c = 1 it is I u > V and the respective slopes are (— 2) and (— 1).
Finally, it is to be mentioned that this result does not depend on the value of 71, which is the outcome of the relative power of the
local and of the central politicians.
5.3. Statements about central expenditure (E) (21).
It does not seem possible to make general statements about the size of Eu and EK Actually it is possible that, ceteris paribus, it is E u § E1, irrespective of the circumstance that Vu — 0 dominates V1 = 0 or not, even in the case when the slopes of the preference functions P are constant and (E / ) “ is higher than (E +
I)1-This result follows easily from what was observed in the preceding § 5.2, since it depends on the very same reasons.
5.4. Statements about Expenditure Harmonization.
Firstly, it seems useful to recall some of the assumptions we made above, which play a relevant role on the degree of expenditure harmonization, and which are precisely:
i) the operative space is greater for CP in the unitary state, since what is not expressedly reserved to local governments is quite plainly allotted to the central governments. The reverse is true in the federal state, where the new wants naturally belong to the local governments;
ii) public expenditure is naturally respectful of par condicio, at least in a formal way;
iii) different decision makers take different decisions, because they have different tastes and they have to face different worlds
(national income, tastes, etc.).
As a consequence, it is reasonable to expect that public spending of central governments (E) presents a higher degree of the 1st kind harmonization in respect of the expenditure of local governments (S), which is comprehensive of transfer outlays (7). So, it seems possible to consider the ratio E /S as a proxy for the degree of harmonization of the 1st kind (22).
When considering the harmonization of the 2nd kind, however, we cannot be sure whether E is more or less harmonized than S. Actually the main character, to which the 2nd kind harmonization
(21) It is / “ the transfers in the unitary state and 11 in the federal state ; of course, all the statements in this § 5 suppose that everything is ceteris paribus between the federal and the unitary state with the exception of the mentioned differences in the vote constraints and in the utility functions P.
is related, springs out of the fart that it is a matter of special expenditures, instead of general expenditures. So, while there are no a priori reasons to expect that the federal-unitary structure may affect the degree of generality (and, since that, of 2nd kind harmonization) of the self-financed expenditure, one could argue that it makes a difference when the transfers-financed local expenditure is considered.
In fact the bargaining process between the CP and the LP in order to fix the amount of the transfers I' is likely to be different according to the federal-unitary structure at least for the following reasons:
1) in the unitary state it is possible that the bargaining takes place between the CP and a union of local governments. In such a case, it is likely that a consistent part of the transfers I is related to the objective of obviating to a number of socio-economic disequi libriums (23): there is no need to point out that such a circumstance is responsible for a large degree of harmonization of the 2nd kind; 2) in the federal state the bargaining is more likely to take place between the CP and single LP: this fact should induce a low 2nd kind harmonization of the local expenditure financed therewith; 3) the different objectives pursued by the CP of the unitary and of the federal states: from this point of view it seems difficult to be able to point out unequivocal statements about harmonization.
Getting back to the 1st kind harmonization, we fixed above the point that it depends upon the size of E and of 8, so that we might infer that the 1st kind harmonization is higher in the unitary state if it is Eu > E> and/or 8“ < 8 f, and vice versa.
Unfortunately we were not able, above, to state whether Eu is greater than E f or not; the model, however, was couched in the incremental form. So, it is possible that total spending tE u be greater than total spending vEf even if the increments are Eu < E1; in that case, one should expect a narrowing of the gap.
Actually, from the assumption i) above it seems safe enough to infer that, originally, it was v£?“ > TiEf and T8u < ^8f ; since that one may expect that the 1st kind harmonization be higher in the unitary states than in the federal states; yet the model needs more specification in order to forecast whether the degree of harmonization is rising or falling.
Particular attention is to be given to the transfer-financed local expenditure, even if the model is not able to state whether it is
L u
>
P .Actually, in the unitary state LP historically began from a position of subordination in respect to CP, and since then they bartered consistent amounts of formal local power against substantial amounts of spending power. This process seems to have lowered the degree of harmonization of th 1st kind and to have raised that of the 2nd kind. Moreover, the latter may be raised even at the level of central expenditure directly.
On the contrary, in the federal state LP began from a much more independent position in respect to CP, and have a stronger bargaining power. So even if one could argué that the outcomes of the trade between CP and LP are more propitious to the latter, the result on the degree of the 1st kind harmonization depends on the relative growth of Central spending (E) and trasfers (I). In thé case that I is growing faster than E ,‘ the degree of the 1st kind harmonization should decrease as measured by the ratio E /S . But things are hot so simple, because CP are likely to constrain the degrees of freedom of LP in their spending decisions in order to reach some common standard in the local services. The. final outcome, then, may well be a higher level of 1st kind harmonization.
As far as the 2nd kind of harmonization is concerned, the federal state does not seem in a different position from that of the unitary state ; all the same, perhaps its CP are so much concerned with the 1st kind that it may still keep pursuing the 2nd kind in a somewhat lesser degree. 6
6. Concluding remarks.
The harmonization of public expenditure is a somewhat cumber some problem, because what people are really interested in is the harmonization of the public benefits which stem out of the public expenditures. Yet, while we may easily observe the amounts of public expenditure, we have no reliable data as far as the amount of benefits are concerned.
in the availability of the public benefits which is typical of any general public expenditure. With the 2nd kind we referred to the objectives to obviate particular forms of socio-economic disequili briums, which typically involve special public expenditures.
The literature on, fiscal federalism doesn’t seem able to cope with the problem of harmonization, since the latter is not a problem of economic efficiency, but a « simple » question of value judgements. Then, the definition of the optimal amount of harmonization depends, in turn, upon a value judgement.
Quite a simple model about the behaviour of politicians was employed, whose main elements wère: 1) politicians maximise their utility (or power) subject to a vote constraint ; ii) the incremental form ; iii) the existence of a trade between local and central politicians, so that money transfers are bartered against formal power of local governments; iv) harmonization is endogenous, because it is largely determined as a by-product of the bargaining process between central and local politicians.
The analytical formulation of the model did not prove much helpful for lack of specification : from that angle the model might perhaps be improved with some empirical work. Anyway, the model was able to suggest that the harmonization of the 1st kind should diminish in the unitary states and possibly rise in the federal states. The 2nd kind harmonization, on the contrary, is expected to rise both in the unitary and in the federal states.
Finally, one might perhaps add that the problem of harmonization is exploited by the politicians in the bargaining processes, like a Pareto’s sociological derivation (24) ; however, while in the federal states it may prove useful for both kind of harmonization, in the unitary states it seems likely to be useful just for the 2nd kind.
Amedeo Fossati
Università di Genova
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