The 6th Institutional reform includes changes in the devolution of taxing powers to the regions. The political agreement puts an end to a very long debate between two alternative models for personal income tax: a split rate model and a surcharge model. This paper briefly reviews the theory of fiscal federalism in order to identify the criteria that we could use to assess the changes that will be made in the devolution of personal income tax to the regions. We then present, from a theoretical point of view, how the two main systems (split rate and surcharge) should be organized. We next turn to a description and a brief assessment of the new arrangements. These include the devolution to the Regions of the existing federal tax expenditures that relates to their fiscal responsibilities and a “surcharge system” that will enable the regions to set their own tax rates, as a tax on the federal personal income tax. We conclude that the new system is an improvement from an efficiency point of view, as it will make the regions more accountable. The consequences on the redistributive effect of personal income tax should be limited and tax competition should be under control. The critical point arises from the magnitude of vertical tax externalities that result from the surcharge system.