Rome, November 21, 2017 - 20.21
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Finance Law

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The Minister of Economics and Finance introduces the Draft Finance Law to Parliament before the month of September. The Finance Law, in accordance with the objectives set in the economic and financial programming document, establishes the annual reference financial framework for the period included in the long-termbudget . It also provides, for the same period, for the annual adjustment of the level of intervention provided by legislation in force so as to keep the financial effects in line with the objectives established.

The Finance Law does not contain provisions of an authorising, systemic or organisational nature. It consists exclusively of provisions intended to realise the financial effects as of the first year considered in the long-termbudget and, in particular:

· the maximum level of recourse to the financial market and of the net balance to be financed in terms of accruals and liabilities for each of the years considered in the long-termbudget, including any specific accounting adjustments previously indicated;

· the variations in tax rates, deductions and brackets, the other measures that affect the amount of tax benefits related to indirect taxes, duties, fees, and tariffs and contributions in force with effect, as a rule, as of 1 January in the year to which the Law refers, as well as corrections of taxes relative to the state of inflation;

· for the laws providing for long-termexpenditures, specifies in table form the percentages for each of the years considered;

· for the laws on permanent expenditures, both current and capital-account, specifies in table form the percentage to be recorded in the budget for each of the years considered in the multiyear budget, the amounts of which are referred to the Finance Law;

· specifies in table form the reductions toward each of the years considered in the long-termbudget, in legislative expenditure authorisations;

· specifies in table form the expenditure allocations for the refinancing (for a maximum of one year) of provisions in force classified in the capital-account expenditures and for which, during the last period, asset and liability allocation is provided, as well as for the refinancing, when so provided by the Law, for one or more of the years considered in the long-termbudget, of provisions in force to provide for economic support, classified in the capital-account expenditures;

· the amount of special funds allocated to cover legislative measures that it is expected will be approved in the financial periods included in the multiyear budget and, in particular, those related to achieving the objectives set in the economic and financial programming document and the corresponding tables;

· the total maximum amount allocated, in each of the years included in the multiyear budget, for the renewal of public-service contracts and for modifications to the economic and regulatory treatment of public-administration employees not contractually specified;

· other merely quantitative adjustments referred to the Finance Law by legislation in force;

· provisions resulting in revenue increases or expenditure reductions, with the exception of systemic and organisational revenues/expenditures, unless they constitute a significant improvement in the balances of the maximum level of recourse to the financial market and in the net balance to be financed in terms of accruals and liabilities;

· provisions resulting in revenue increases or expenditure reductions and specifically intended to support or relaunch the economy, with the exclusion of local or micro-sectoral interventions;

· provisions containing measures correcting the financial effects of the laws for which, during the course of implementation, variations are verified or are about to be verified, with respect to revenue and expenditure forecasts.

The Finance Law also specifies the percentage of new or major revenue for each year included in the long-termbudget that may not be used to cover new or major expenditures. In addition, pursuant to Article 81, paragraph 4, of the Constitution, the Finance Law may determine, for each of the years included in the multiyear budget, new or major current expenses, revenue reductions and new net targets to be recorded in the special current-transfers fund, within the limits of new or major tributary, extra-tributary and contributory revenue and of permanent reductions in current-expenditure authorisations. In any case, subject to these coverage procedures, the new or major expenditures provided for by the Finance Law may not contribute to expenditure growth rates, whether current or capital-account, that are incompatible with the rules laid down in the economic and financial programming document as deliberated by Parliament.

In conclusion, the Finance Law must specify:

· the maximum level of the net balance to be financed and of the recourse to the market for each of the years considered in the multiyear budget, in accordance with the decision approving the EFPD;

· the amounts of the current-transfer (Table A) and capital-account (Table B) special funds;

· the annual amounts to be recorded in the budget relative to permanent expenditure laws consisting of both current and capital-account charges quantified by referral from legislation in force to the Finance Law (Table C);

· the annual percentages to be recorded in the budget relative to the long-termexpenditure laws (Table F);

· the total maximum amount allocated for renewal of public-service contracts and the amount allocated to modifications to the economic and regulatory treatment of public-administration employees not contractually specified;

· other merely quantitative adjustments referred to the Finance Law by legislation in force.

The Finance Law may determine:

· the variations in tax rates, deductions and brackets, the other measures that effect the amount of tax benefits related to indirect taxes, duties, fees, and tariffs and contributions in force with effect as of 1 January in the year to which the Law refers, as well as corrections of taxes relative to the state of inflation;

· refinancing, generally for one year, of capital-account expenditure that, in the previous period, presented accrual/liability allocations; refinancing, when provided by the Law, for one or more of the years included in the long-termbudget, of capital-account expenditure regulations in force considered to support the economy (Table D);

· reductions in legislative expenditure authorisations for each year in the multiyear budget (Table E);

· regulatory modifications that result in revenue increases or expenditure reductions;

· expenditure increases or revenue reductions intended to support or relaunch the economy, with the exclusion of local or micro-sectoral interventions.


The Finance Law may not contain:

· delegated legislative regulations;

· regulations increasing expenditures or reducing revenues that are of a local or micro-sectoral nature;

· systemic or organisational regulations, including those involving revenue increases or expenditure reductions, unless they significantly improve the budget balances;

· regulations for coverage of current-transaction charges with current-account resources.

An annex to the Draft Finance Law report describes the legislative measures adopted during the period, the relative financial effects and the further corrective measures to be adopted.

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