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In the next few months important decisions will be taken on economic policies: the budget adjustment manoeuvre due to exceeding the 3% threshold, the introduction of Dpef and the announced tax reduction. Although the government will try to hide the social cost of its choices, it is evident that some social classes will have to bear the brunt of these cuts. At the same time, there are no signs of economic recovery, the development rate for 2004 is just a little over zero, the inflation rate in Italy is higher than the European average, the crisis in production is getting worse and poverty is increasing. The situation isn’t only negative it is catastrophic. The union, reiterating its idea for a universalistic qualitative welfare state, is preparing to oppose hardly to government policies.

In the 90s European countries put the rising public debt under control which had increased even more than in 1990 when the recession hit the whole of Europe. The positive performance in the second half of the 90s led to a reduction in public spending due to a broader monetary policy which reduced the cost of the debt. While most countries were busy trying to meet requirements needed to get into the euro monetary system, even the three countries which chose to stay outside obtained similar results, in terms of deficit. In any case they benefited to a lesser extent from the reduction of spending than the euro countries. As for welfare spending, there was a considerable reduction especially in the countries which adhered to monetary unification.

Considering that social services could be provided either by the public sector and private bodies, the dimensions of the Welfare State are similar in Europe and in the Usa. However, the breakdown in spending is different: more is spent on health in the Usa whereas assistance and social security are the priorities in Europe. The redistributive effects of the two systems are difficult to assess given that each item of social spending presents specific features. It must, however, be stressed that the dimensions of the social state are an inadequate criterion to compare the level of redistribution of social spending.

The union plays a fundamental role to safeguard workers’ standard of living. To aid their mission the distributive action of the public sector and the assessment of efficacy of various redistribution tools are crucially important. In this paper, Beniamino Lapadula highlights the necessity of a new in-come policy that clearly distinguishes between the positions of the right and the left, especially regarding the hypothesis for a reduction in taxation which has found keen supporters from the left. The union, however, believes active policies and the high quality of public services represent the only tools to guarantee the extension of citizenship rights and the reinforcement of social cohesion. An analysis is given of the present economic situation characterised by pronounced inequalities in the labour market. The proposals and reforms advanced and achieved in recent years on taxation and redistribution are presented, highlighting the necessity to improve measures and interventions developed in a fragmentary way in the previous legislature, for which two reform hypotheses have been put forward (cfr. the proposal of C. De Vincenti and of P. Bosi, M. Baldini and M. Matteuzzi, infra).

This paper proposes a reform of family allowance to combat poverty, coherent with the vision of human development welfare and the tradition of selective universalism of the Onofri Commission. The main contents of the reform are: a) Unification of the main tax deductions for minors and spending in the form of family allowances in a new and more effective spending measure to support families which resolves the problem of the incapacity of tax deductions. b) The full-scale introduction of the Minimum Income Mechanism whose experimentation had been initiated (but only to be interrupted). c) The reform of current selectivity criteria, especially the Ise tool. This reform aims to achieve better redistribution objectives than the current ones, concentrating available resources on families with minors and medium to low Ise. It should be maintained a certain level of selectivity in the interventions on the basis of family not individual criteria. The reform will also use any eventual additional resources to cover all urgent needs of our welfare systems rather than universalistic monetary redistribution.

Given shortcomings in present low income support measures, possible reforms are presented. The underlying consideration is to implement a joint reform of Irpef and family benefits by introducing tax cuts and benefits for minors regardless of income, and additional measures such as income transfer (negative taxation) in the case of fiscal incapacity; more progressivity of Irpef to obtain the necessary resources from high income earners to finance allowances and tax deductions. The redistributive effects of this reform are highlighted in favour of low and medium income families and the possibility to support young people by funding incentives to enable their entry to the labour market.

Through taxation modern states have funded the two basic functions which have characterised the history of democracies in the 20th century: the provision of services and income redistribution through the principal of progressivity. The current anti-tax extremism propagated by the right worldwide has a political rather than an economic objective: to reduce fiscal revenue and as a result also public services. In this way citizens disaffection for the state increases and the sense of collective responsibility decreases. Therefore, the funding of the welfare state cannot be discussed without bringing the matter of the democratic legitimacy of taxation to the forefront of the political debate. In fact, the reformatory forces have often used the same petty terms of the conservatives. Distinctions between the right and left have disappeared with one single slogan on the lips of all politicians: less taxes at all costs. However, it is necessary to restore the centrality of the state’s role, crucial in a market economy, in the use of taxation as one of the tools for the funding of public services and functions, applying notions of distributive equity and socio-economic justice.

The paper examines the role of Irap in the Italian taxation system. In particular it analyses the role of this regional tax in the 1997-98 fiscal reform in the light of the objectives to simplify and streamline the system, increase neutrality, reinforce the financial autonomy of the regions and reform their funding. Successive developments are also looked into, especially the greater autonomy of the regions. The matter of the announced abolishment of Irap is discussed considering the problems faced by the regions in terms of financial autonomy and coverage.

The main objective of this paper is to provide arguments needed to support the thesis that the most serious obstacle to the construction of a competitive and fair economy in Italy is represented by the production structure, characterised by the prevalence of small or micro companies and by a manufacturing specialisation centred mostly on traditional production. This structure acts as a hindrance to the utilisation of human capital encouraging growth strategies which are not focused on the introduction of innovations, thus proving to be fragile. The removal of this obstacle requires different policy interventions other than tax cuts, reduction in social spending and the insistence on the flexibilisation of the labour market.

Equality and efficiency are the reasons why public provision and production of social services need to be supported. This does not mean doing away with all monetary benefits: a minimum income, for example, is urgently needed for our country. However, the idea that the public provision and production of social services should be scaled down is highly debatable yet supported by many left-wingers.

The paper examines the motivations and pathways that have characterised the debate on essential assistance guaranties (Lea) in health and social services, starting from the concept of «selective universalism» as a guarantee of the exercise of citizenship rights but also as a possibility to control social spending. An outline is given of the course which led to the definition of health LEAs with the incorporation of the principle of «selective universalism» and the guarantee of «essential and appropriate» services for everybody. On the other hand, the social LEAs have been inspired by the guarantee of a «minimum level of social service» considered indispensable, although in the document which is still to be made public, no mention is given to the responsibility of the state to guarantee uniformity in the exercise of social citizenship rights. It is quite clear that the government intends to lower the implementation threshold, reducing the services rather then selecting access, thus substituting public intervention with the social market.

After having outlined the reasons to support public action for self-sufficiency policies, this paper deals with some of the main issues surrounding the debate on the activation of a public, universal self-sufficiency fund in Italy. Firstly, a concise presentation of the reasons to prefer the setting up of a specific fund to the mere reinvigoration of existent policies is given. Secondly, the importance of intergenerational equity and financial sustainability in the implementation of such a fund are high-lighted. Thirdly, some elements of the debate on the opportunity to activate a single national fund and/or numerous regional funds are illustrated. Lastly, some aspects of the possible strategies for the activation of the fund and its financing are briefly discussed.

Isee, the equivalent economic situation indicator, has a fundamental role in the establishment of an integrated system of social services and interventions. The use of Isee has become more widespread over the last two years after an initial period of caution due to legislative vagueness. At present its application involves some 12 million citizens. It is thus legitimate to inquire on the effects they have produced in terms of the efficacy of selective procedures. The adequacy of equality objectives is no doubt linked to the modalities of the construction of the indicator, the system of applicative regulations, especially the capacity to construct an effective control structure.

The reform of article V of the Constitution and the process which will lead to the definition of the Lep represent fundamental factors to analyse prospects in the Italian welfare model. Indeed the setting up of the social policy information system acquires a strategic function, whereas the Isee system represents a first important step. This premise introduces the experience initiated by the Rome City Council, which is particularly significant in the field of selective policies applied by social services. In fact, through an integration of the Isee calculation mechanisms, consented by the norm, it was possible to take account of the specific characteristics of the elderly and set specific policy objectives.

Spending on social protection constitutes a large part - between a fifth and a third - of total resources produced by advanced economies. The Social State is however a recent institution which mainly developed in the post war years. Today however many believe it to be in crisis. After a brief outline of the historical development of the Welfare State, this paper will go on to analyse the present extension and distribution of social spending in Italy and in the rest of the Eu. Lastly it will highlight future prospects and challenges in the light of the modified economic context with particular reference to the rise in integration between countries, to the slowdown in economic growth in Europe and the spreading of new technologies. Consolidated knowledge as well as clichés devoid of any empirical foundation will be illustrated.

Each year the Commission on social exclusion presents a «Poverty Report» which illustrates, through a series of indicators and analyses, the main features of poverty in Italy and the policies which have been implemented to contrast it in the previous year. Most of the data presented initially seem to be easily interpreted but it is not always the case: in the construction of some indicators, there may be some hidden conceptual traps which can be misleading and offer a distorted vision of the reality. Without a «preventative» clarification of what is really meant by poverty, you run the risk of misinterpreting the real condition of poor families and the most appropriate policy measures needed to improve their standard of living. It is thus necessary to clear up any possible confusions to prevent any policy mystification from causing policy errors.

The paper gives a brief overview of safety net mechanisms in Eu countries (before enlargement), outlining eligibility conditions after social protection adjustments and reforms in the 90s and the current trends in the activation of minimum income beneficiaries. By analysing the policies of European states, there emerges a prevalent model which foresees the activation of the beneficiaries of safety net mechanisms with rigid access/exclusion conditions. The excessive use of restrictive, conditional tools risks the re-emergence of the idea of «culpable» poverty, hence undermining the achievements of social inclusion policies.

This paper discusses the building of pension reform in the light of economic theory, and their application to different types of economy. The opening section sets out the simple economics of pensions. The second section discussed a series of myths which have proved remarkably persistent. Building on this analysis, the latter part of the paper sets out the foundations of effective pensions policy. The third section discusses the prerequisites which any pension reform must respect, i.e. those things which policy advisers can - and should - assert authoritatively. The fourth turns to the range of choices facing policymakers, drawing of the very different arrangements in different countries. The main conclusions are threefold: (1) The key variable is effective government. (2) From an economic perspective, the difference between pay-as-you-go and funding is second order. (3) The range of potential choice over pension design is wide. One size does not fit all.