taxes introduced with the finance law for 2008 and the anti - crisis decree of last november ( more than €6 billion in total ). net of these items, there was a significant fall in corporate income tax. it should be noted that whereas the receipts from the oneoff taxes have basically run their course, the contraction in corporate income tax points to a fall in receipts from the second payment on account at the end of the year. 2. fiscal policy ’ s response to the crisis countries have responded to the severity of the crisis with discretionary policies to sustain the economy the severity of the crisis has created a vast consensus at international level on the need to accompany automatic stabilizers and monetary policy with discretionary countercyclical budgetary policy interventions. in italy, however, the high level of the public debt limits the scope for increasing the deficit. it remains possible to act through changes in the composition of the budget. it needs to be stressed that the sensitivity of the yields on public debt securities to the conditions of the public finances ( deficit and debt ) tends to increase in periods of turbulence on the financial markets : the yield differential between ten - year italian and german government securities widened in the second half of 2008 to more than 150 basis points and is still very considerable, of the order of 100 basis points. in the future, various factors will tend to increase the average cost of the public debt : the substantial recourse to the market by governments to fund measures for supporting the economy, the recovery of economic activity, and fears of a rise in inflation. in italy, the use of the budget for anti - cyclical purposes has aimed above all, including via administrative channels, to speed up the employment of resources already allocated and direct them in order to support aggregate demand and mitigate the social costs of the recession. the interventions the response to the crisis has consisted primarily in three decree laws, which together appropriated €25 billion of resources for the three years 2009 - 11 ( of which €17 billion funded by increasing revenue ), and in the draft mid - year budget revision. budgetary action came on top of measures aimed at guaranteeing the stability of the financial system and alleviating firms ’ liquidity problems. in november 2008 a first package was approved. in addition to several tax reliefs for firms, the package introduced transfer payments to low - income households ( known as the family bonus, which supplemented the social card scheme launched during the previous summer ) ; automatic income stabilizers were strengthened for the two

documents of the budget cycle must provide. the following are especially important for planning purposes : the information needed to construct the budget on an unchanged policies basis, the data on planned revenue and expenditure, and the economic policy objectives set for the subsectors of general government. in the last ten years the targets for the public finances have frequently been missed and the objective of budgetary balance has been repeatedly postponed. this has entailed heavy costs in the management of the present crisis and reduced the scope for budgetary policy action. strengthening the rules and procedures of the budget is therefore of great importance. fiscal federalism must contribute to curbing expenditure the implementation of fiscal federalism offers an opportunity to make the management of public resources more efficient and to rationalize expenditure, while bearing in mind the principle of solidarity. the increase in the proportion of local taxes in the financing of local government expenditure in place of central government transfers and the strengthening of fiscal autonomy by allowing changes to tax rates and bases create a closer link between expenditure and revenue decisions and can lead to greater efficiency. a crucial element of the enabling law passed by parliament in april is the replacement of the historical cost criterion by that of standard costs and funding requirements for the allocation of resources to local authorities. the calculation of these indicators is subject to technical difficulties that are accentuated by the lack of harmonized budgets at the different levels of government and the large territorial disparities between the levels and quality of public expenditure. the prompt approval of the so - called local government code is also of crucial importance for the implementation of the enabling law on fiscal federalism. the plan for achieving expenditure savings by rationalizing and simplifying the different levels of government, so as to exploit economies of scale and avoid useless overlapping, appears highly commendable. the local government code will specify the division of the functions performed by municipalities and provinces, including the identification of those to be considered fundamental for ensuring fiscal equality, reorganize the network of intermediate local authorities ( e. g. mountain communities and consortia of municipalities ), rationalize the provinces, reorganize the peripheral offices of the ministries, streamline municipal and provincial councils, and rewrite the domestic stability pact. a significant increase in the average effective retirement age is desirable in the medium term a significant increase in the average effective retirement age is required. given the sharp rise in life expectancy, a lengthening of working lives is important in order to match the need to curb public expenditure with the need to