Italy Cuts Fuel Taxes to Offset Soaring Energy Costs
(Bloomberg) -- Italy’s government approved a temporary cut to excise taxes on fuel in a bid to help citizens deal with higher costs caused by the conflict in the Middle East.
Prime Minister Giorgia Meloni said on Wednesday that her cabinet approved the €0.25 ($0.29) per liter reduction in fuel levies, part of a broader package of measures taken as an emergency backstop against soaring energy prices.
The measures are worth hundreds of millions of euros, her deputy Prime Minister Matteo Salvini said, and will be in place only for a limited period of time.
Fuel prices have shot up globally since the Feb. 28 start of the US-Israeli conflict with Iran, putting pressure on consumers. As it cuts taxes, the Italian government is also asking oil companies to limit pump prices, with a cap of €1.90 per liter for diesel, Salvini said.
Italy, like other governments, is reviewing alternatives to quickly help consumers weather the sudden price shock. Salvini said the government may also consider taxing the extra profits made by energy companies selling fuel at an higher price.
“I hope we won’t have to get to that point,” Salvini said, adding that conversations with energy executives will continue in coming weeks.
U.S. Vice President JD Vance and other key officials in Donald Trump’s administration plan to huddle with oil executives Thursday as the White House looks for ways to tame surging fuel prices after the US attack on Iran, Bloomberg reported Wednesday.
As of Wednesday, the average cost of a liter of self-serve diesel on Italy’s national road network stood at €2.10, while gasoline cost €1.87 per liter, according to the Italian Industry Ministry.
Representatives from oil companies Eni SpA and Tamoil Italia SpA were among those present at a meeting Salvini held Wednesday with fuel distributors and producers. Rome has intensified monitoring across the energy supply chain amid concerns over the potential for speculative behavior.
“We’re fighting speculation,” Premier Giorgia Meloni told public broadcaster Rai Uno after Wednesday night’s cabinet meeting.
The temporary cuts will lower the tax on fuel and gasoline by €0.25 per liter and by €0.19 per kilogram for liquified petroleum gas. The government will also introduce a temporary tax break for the trucking sector and a separate one for the fishing industry.
The new measures will be in place from Thursday and last for 20 days, according to the government’s statement.
Italy has one of the highest fuel tax burdens in Europe, making pump prices particularly sensitive to geopolitical shocks. Any move to adjust excise duties would have implications for inflation and public finances at a time when the country is struggling with high debt and relatively sluggish growth.
The government had previously begun making checks on pricing dynamics, focusing on whether price increases reflect international crude costs or margins along the distribution chain.
(Updates with Meloni comment, details of Italian measures from 10th paragraph)
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