Italy is exploring a new approach to reduce fuel taxes as soaring energy costs impact households and businesses. Prime Minister Giorgia Meloni announced that the government is considering implementing a flexible mechanism that would link fuel tax reductions to the additional VAT revenue generated when fuel prices rise. This proposal aims to replace a temporary diesel tax reduction that recently expired.
Before its expiration, the government had incrementally lowered diesel duties, with the latest reduction decreasing the tax by 6.1 cents per litre. This measure came to an end on Tuesday, leading to an increase in fuel prices. Notably, Eni raised the maximum diesel price at its petrol stations from €2.19 to €2.25 per litre, while the price for unleaded petrol remained capped at €1.99 per litre.
The Italian government has urged energy companies and fuel retailers to maintain temporary price caps to mitigate the impact on consumers. The proposed mobile excise-duty mechanism would allow the government to use part of the additional VAT revenue to offset the higher fuel costs, providing relief to consumers.
Prime Minister Meloni highlighted that since September, the government has accumulated approximately €170 million, which could be allocated for further measures. Officials are currently evaluating whether to deploy these funds immediately or reserve them for future use.
As the government considers its next steps, it will also monitor the effectiveness of ongoing fuel price caps in containing costs for consumers. The decision will depend on the continued success of these measures in managing fuel price increases.