ABSTRACT
This chapter deals mainly with the regional level of government in relation to the central or national level. It provides an evaluation of the Italian experience by focusing on the following critical issues. These are the consistency between the objective of enhancing efficiency through fiscal decentralisation and the objective of ensuring reasonable uniform standards for essential public services in every local community; the trade-off between interregional redistribution and the incentives of local governments to pursue active tax policies; and the effects of local governments' fiscal autonomy on the North-South dualism. The chapter focuses on the Regions as the authors represent the central government's counterpart in the political debate on fiscal federalism. The situation was quite similar for the central and the local governments: the behaviour of the two did not differ in a significant way because the kind of controls and political pressure by citizens had almost the same effect.
