Italian Government Advances Federal Fiscal Reform Despite Regional Opposition

The Italian government is moving forward with a federal fiscal reform that would allocate €7.6 billion to regions and municipalities through a “zero‑cost” model that ties local IRPEF quotas to transfers that are simultaneously cancelled. Regional and municipal leaders argue the scheme freezes funding, undermines financial autonomy and removes the ability for allocations to grow with tax bases. The opposition is led by the regions of Campania, Emilia‑Romagna, Puglia, Tuscany and Sardinia, while centre‑right administrations have generally supported the plan.

The executive plans to issue the implementing decree by August, even though the unified conference of state, regions and local authorities failed to reach a formal agreement by the 30‑day deadline. Under the law, the government may proceed if the conference does not conclude within that period, with the delegation to be exercised by 29 August 2026. The reform also aims to simplify tax relations with citizens and businesses, promote voluntary payments through advance notices, direct‑debit incentives and reduced penalties, and to streamline administration of IMU, TARI and other municipal taxes.