Gainers and losers from a flat tax: an interregional perspective

Personal income taxation in Italy contributes significantly to public revenues, it is progressive and attains a good degree of income redistribution across individuals. It has also significant interregional redistributive effects, which contribute to reduce interregional income disparities. However, personal income taxation has some important drawbacks, primarily as regards equity and excess burden of taxation. Since 1994 there have been proposals to introduce a flat income tax. Such a reform would impact on the tax system equity and efficiency, but would also affect interregional income redistribution, an issue rather disregarded in the current debate on personal income tax reform.