Giorgio Panella, Andrea Zatti, Fiorenza CarraroGiorgio Panella, Andrea Zatti, Fiorenza Carraro

“Historically the growth of cities has been driven by demographic pressure. Today is due to other driving forces such as the means of transportation, the price of land, individual housing preferences, demographic trends, cultural traditions and constraints, the attractiveness of exiting urban areas, and, not least, the application of land use planning policies at both local and regional scales” (EEA, 2006)

FISCAL CRISIS OF LOCAL MUNICIPALITIES

Predominance of budget needs over urban Predominance of budget needs over urban

sustainabilitysustainability

Fiscal competitionFiscal competition

Urban sprawlUrban sprawl

Unsuccessfull assessment of the non Unsuccessfull assessment of the non

monetary values of soilsmonetary values of soils

Unequal rent distribution Unequal rent distribution

Fiscal authonomy-negative outcomesFiscal authonomy-negative outcomes

Zoning and urban planning Zoning and urban planning

Development rights and fiscal instrumentsDevelopment rights and fiscal instruments

Law n10/1977 (legge Bucalossi)-Planning permission Law n10/1977 (legge Bucalossi)-Planning permission and and planning contribution/construction chargeplanning contribution/construction charge

Urbanization Urbanization chargescharges

Construction Construction costscosts

Fiscal Objectives: - CompensationsFiscal Objectives: - Compensations -Revenue collection-Revenue collection

20012001 20022002 20032003 20042004 20052005 20062006

PiemontePiemonte 3,83,8 3,93,9 3,63,6 4,14,1 4,34,3 4,84,8Valle d'AostaValle d'Aosta 1,81,8 2,32,3 1,71,7 2,72,7 3,13,1 3,13,1LombardiaLombardia 4,14,1 4,44,4 5,25,2 5,75,7 3,53,5 4,64,6

Trentino Alto AdigeTrentino Alto Adige 3,23,2 3,23,2 2,52,5 3,23,2 2,42,4 3,43,4VenetoVeneto 55 5,95,9 5,95,9 6,66,6 5,35,3 5,15,1

Friuli Venezia GiuliaFriuli Venezia Giulia 1,81,8 2,42,4 2,22,2 2,22,2 1,51,5 1,61,6LiguriaLiguria 1,91,9 2,22,2 2,82,8 3,23,2 3,73,7 33

Emilia RomagnaEmilia Romagna 7,27,2 8,18,1 5,25,2 8,18,1 7,77,7 7,77,7ToscanaToscana 4,84,8 6,66,6 77 8,38,3 6,96,9 7,57,5UmbriaUmbria 2,32,3 2,72,7 2,82,8 2,82,8 3,13,1 2,82,8MarcheMarche 3,53,5 5,55,5 4,44,4 6,56,5 6,36,3 5,55,5LazioLazio 33 4,34,3 4,44,4 99 6,56,5 5,35,3

AbruzzoAbruzzo 4,14,1 4,44,4 4,24,2 4,94,9 4,34,3 5,35,3MoliseMolise 2,42,4 3,23,2 2,82,8 2,82,8 2,52,5 2,32,3

CampaniaCampania 1,51,5 1,81,8 2,22,2 3,53,5 3,73,7 2,62,6PugliaPuglia 4,14,1 4,14,1 5,55,5 5,35,3 5,75,7 3,93,9

BasilicataBasilicata 2,62,6 00 3,23,2 22 2,72,7 2,22,2CalabriaCalabria 1,81,8 2,12,1 2,32,3 33 3,33,3 33SiciliaSicilia 3,13,1 1,71,7 2,42,4 3,83,8 33 2,52,5

SardegnaSardegna 2,22,2 2,92,9 2,92,9 3,13,1 2,12,1 2,12,1ITALIAITALIA 3,73,7 4,14,1 4,34,3 5,55,5 4,44,4 4,44,4

Source: IRPET on ISTAT and ISAE data.Source: IRPET on ISTAT and ISAE data.

   20012001 20022002 20032003 20042004 20052005 20062006    Average valueAverage value

                       PiemontePiemonte 1212 12,912,9 11,111,1 1111 10,710,7 12,212,2    11,711,7

Valle d'AostaValle d'Aosta 3,63,6 5,25,2 3,53,5 5,95,9 7,37,3 7,67,6 5,55,5

LombardiaLombardia 7,37,3 7,87,8 9,89,8 10,210,2 5,65,6 7,97,9 8,18,1

Trentino Alto AdigeTrentino Alto Adige 6,36,3 5,85,8 55 6,46,4 4,94,9 7,87,8 6,06,0

VenetoVeneto 15,815,8 16,516,5 17,317,3 1717 14,314,3 13,713,7 15,815,8

Friuli Venezia GiuliaFriuli Venezia Giulia 5,35,3 7,37,3 5,45,4 5,65,6 3,23,2 3,73,7 5,15,1

LiguriaLiguria 5,15,1 7,77,7 8,18,1 9,79,7 1313 11,211,2 9,19,1

Emilia RomagnaEmilia Romagna 30,130,1 29,629,6 18,118,1 22,822,8 23,723,7 23,223,2 24,624,6

ToscanaToscana 16,616,6 25,725,7 2323 25,425,4 24,324,3 24,424,4 23,223,2

UmbriaUmbria 5,15,1 5,95,9 5,35,3 5,25,2 5,95,9 5,75,7 5,55,5

MarcheMarche 99 1616 1212 15,515,5 1717 15,315,3 14,114,1

LazioLazio 15,315,3 19,919,9 17,717,7 34,534,5 2222 16,616,6 21,021,0

AbruzzoAbruzzo 14,614,6 1717 14,714,7 11,311,3 10,410,4 14,514,5 13,813,8

MoliseMolise 66 1212 9,49,4 7,77,7 7,57,5 66 8,18,1

CampaniaCampania 5,15,1 5,55,5 77 10,310,3 11,911,9 8,28,2 8,08,0

PugliaPuglia 17,117,1 13,213,2 19,219,2 14,214,2 22,322,3 14,814,8 16,816,8

BasilicataBasilicata 8,18,1 00 8,58,5 5,25,2 6,86,8 5,85,8 5,75,7

CalabriaCalabria 5,35,3 6,26,2 7,67,6 10,310,3 11,811,8 11,711,7 8,88,8

SiciliaSicilia 11,911,9 7,57,5 1111 2121 16,516,5 12,712,7 13,413,4

SardegnaSardegna 8,28,2 9,89,8 8,78,7 7,77,7 5,15,1 55 7,47,4ITALIAITALIA 10,110,1 11,311,3 11,811,8 13,813,8 10,910,9 11,311,3    11,511,5

Source: IRPET elaborations on ISAE dataSource: IRPET elaborations on ISAE data

Incidence established by the city council, on the Incidence established by the city council, on the basis of specific parameters provided by each basis of specific parameters provided by each Region according to:Region according to:

The extent and trend of the populationThe extent and trend of the population

The geographic characteristicsThe geographic characteristics

The zoned areas as defined by the town and The zoned areas as defined by the town and urban planningurban planning

The limits and mandatory terms set by the The limits and mandatory terms set by the central State and the Regionscentral State and the Regions

The concept of use:The concept of use:

New residential buildingsNew residential buildingsRetrofitting of existing buildingsRetrofitting of existing buildingsRetrofitting of buildings not belonging to the residential Retrofitting of buildings not belonging to the residential sectorsector

Estimate of the Estimate of the average cost of urbanization /constructionaverage cost of urbanization /construction

Urbanization coefficientsUrbanization coefficients

The predominance of budget The predominance of budget needs with respect to urban needs with respect to urban

sustainability problemssustainability problems

Fiscal competition between local Fiscal competition between local municipalitiesmunicipalities

Municipal debtMunicipal debt

Correlation between urban planning and budget Correlation between urban planning and budget revenuesrevenues

ICI & construction charges:ICI & construction charges:objctive: catching part of the building rentobjctive: catching part of the building rentfunctioning: building cadastrial rent vs. construction functioning: building cadastrial rent vs. construction

costscoststimetable: Once a years vs one off-paymenttimetable: Once a years vs one off-payment

Negative outcomes: 1) Predominance of budget Negative outcomes: 1) Predominance of budget needsneeds

On the one side, urban development enlarges the tax base for ICI On the one side, urban development enlarges the tax base for ICI and Urbanization charges; on the other one, it feeds the demand and Urbanization charges; on the other one, it feeds the demand for urban infrastructures and servicesfor urban infrastructures and services

FLEXIBILITYFLEXIBILITY

Negative outcomes: 2) Fiscal competitionNegative outcomes: 2) Fiscal competition

Competition between neighboring local municipalitiesCompetition between neighboring local municipalities Competition within the same metropolitan areaCompetition within the same metropolitan area

COOPERATIVE GAMECOOPERATIVE GAME Tax base sharingTax base sharing Institution of a compensation fundInstitution of a compensation fund

Negative outcomes: 1) municipal debtNegative outcomes: 1) municipal debt

Urbanisation brings about an increase in the tax Urbanisation brings about an increase in the tax pressure pressure

-direct duties-direct duties-tariffs -tariffs

Increasing the tax rates of existing taxesIncreasing the tax rates of existing taxes Relying on entrance taxesRelying on entrance taxes

  Urbanized soil Urbanized soil

2000 (km2000 (km22))Urbanized soil Urbanized soil

1990 (km1990 (km22))

Urbanized soil-Urbanized soil-Difference 1990-Difference 1990-20002000

Rate of increase Rate of increase (1990-2000)(1990-2000)

           TorinoTorino 452,58452,58 412,57412,57 40,0140,01 8,8%8,8%AostaAosta 47,0647,06 37,4637,46 9,609,60 20,4%20,4%MilanoMilano 704,39704,39 694,17694,17 10,2210,22 1,5%1,5%BresciaBrescia 364,60364,60 350,44350,44 14,1614,16 3,9%3,9%BolzanoBolzano 116,93116,93 111,81111,81 5,125,12 4,4%4,4%VeneziaVenezia 229,93229,93 217,68217,68 12,2512,25 5,3%5,3%TriesteTrieste 43,1943,19 41,6041,60 1,591,59 3,7%3,7%GenovaGenova 108,46108,46 108,46108,46 0,000,00 0,0%0,0%BolognaBologna 206,70206,70 178,61178,61 28,0928,09 13,6%13,6%FirenzeFirenze 181,96181,96 166,12166,12 15,8415,84 8,7%8,7%PerugiaPerugia 203,02203,02 189,83189,83 13,1913,19 6,5%6,5%AnconaAncona 131,81131,81 130,40130,40 1,411,41 1,1%1,1%RomaRoma 648,51648,51 624,86624,86 23,6523,65 3,6%3,6%NapoliNapoli 334,58334,58 326,77326,77 7,817,81 2,3%2,3%BariBari 251,01251,01 249,62249,62 1,391,39 0,6%0,6%TarantoTaranto 144,87144,87 142,09142,09 2,782,78 1,9%1,9%Reggio CalabriaReggio Calabria 107,11107,11 97,6897,68 9,439,43 8,8%8,8%PalermoPalermo 246,98246,98 240,52240,52 6,466,46 2,6%2,6%CataniaCatania 240,28240,28 236,67236,67 3,613,61 1,5%1,5%CagliariCagliari 185,28185,28 160,96160,96 24,3224,32 13,1%13,1%

ISPRA (2008) on CORINE Land Cover data.ISPRA (2008) on CORINE Land Cover data.

Urbanized soils (kmUrbanized soils (km22) period 1990-2000) period 1990-2000

Modulation of existing urban charges, according to the soil Modulation of existing urban charges, according to the soil use and lossuse and loss

Tax relieves for activities which do not involve an icrease in Tax relieves for activities which do not involve an icrease in the urban loadthe urban load

ICI tax cut (and exemption) for high quality agricultural ICI tax cut (and exemption) for high quality agricultural lands and landscapeslands and landscapes

Construction charges able to tackle the soil loss and the Construction charges able to tackle the soil loss and the negative externalities faced by the current and future negative externalities faced by the current and future generationsgenerations

ICI, local Council property tax, defined in accordance with ICI, local Council property tax, defined in accordance with the land lossthe land loss

• Link Link betweenbetween urban planning and local budget revenues urban planning and local budget revenues

New market based instruments serving environmental issues New market based instruments serving environmental issues should be combined with existing traditional fiscal should be combined with existing traditional fiscal instruments (like exemptions or tax rebates) at local levelinstruments (like exemptions or tax rebates) at local level

• Repeal of the construction charges or at least Repeal of the construction charges or at least of the urbanization charges and arrangement of the urbanization charges and arrangement of a new Local Council Property Taxof a new Local Council Property Tax

• Constrcution charges as environmental Constrcution charges as environmental incentives/disincentivesincentives/disincentives

• Construction charges to reflect the costs Construction charges to reflect the costs involved in the provision of public goods (city involved in the provision of public goods (city centre vs. suburbs)centre vs. suburbs)

• Pigouvian taxPigouvian tax• Construction charges so as to account for the Construction charges so as to account for the

present and future costs.present and future costs.