The Council of Ministers has approved the extension until May 1 of the reduction of excise duties on fuels, which was introduced with the decree law of March 18 to counter the increase in gasoline and diesel prices. The reduction – which amounts to 24.4 cents per liter – would otherwise have expired on April 7.
HOW MUCH THE MEASURE COSTS AND WHERE THE FUNDS COME FROM
The extension of the excise duties will cost 500 million euros, coming 200 million from the extra VAT revenue through the mechanism of the so-called “mobile excise duties” (i.e., the variability of taxes on fuel sales depending on price trends), and the remaining 300 million from the freezing of auctions on CO2 emission quotas.
Of these 500 million, 30 million will be specifically allocated to support agricultural companies, particularly affected by the rise in diesel, the fuel most used by agricultural machinery.
EUROPEAN RECOMMENDATIONS
Italy is one of the European Union countries that applies the highest excise duties on gasoline and diesel, which guarantee the state an annual revenue of around 25 billion euros.
Beyond their importance for public finances, excise duties also act as a deterrent to the use of fossil fuels. For this reason, their reduction conflicts with the requests of the European Commission, which has urged EU countries to limit fuel consumption for transport in view of a possible worsening of the energy crisis triggered by the war in the Persian Gulf.
On the other hand, the excise duty discount serves to prevent the increase in gasoline and diesel prices, by raising the transportation costs of goods, from reflecting on consumer goods prices and reducing citizens’ purchasing power.
THE AGREEMENT ON TRANSITION 5.0
The decree approved today also incorporates the recent agreement with employers’ associations on Transition 5.0, the incentive program for digitalization and energy efficiency of businesses. The so-called “phased-out companies” of Transition 5.0 – that is, those that had submitted a request for a tax credit by the end of last November, before the resources ran out – will have access to 1.5 billion, 200 million more than allocated in the budget law.
THE EXCEEDING OF THE 3 PERCENT DEFICIT LIMIT
During a press conference at Palazzo Chigi, Economy Minister Giancarlo Giorgetti discussed the possibility of exceeding the 3 percent deficit limit, commenting on the “willingness to request or not request the derogation clause provided by the new European economic governance regulation.”
“It is clear,” he said, “that reflection at the European level, if the situation does not change, will be inevitable. I expressed this assessment at the beginning of the conflict, reiterated it at the Eurogroup earlier this week. I will do so at any international consensus I participate in, because this is the reality.”
Referring to the financing of the extension of the excise reduction, Giorgetti specified that “for 200 million there is self-coverage deriving from the increase in VAT revenue. For another 300 million, these are resources recovered from ETS resources that had not yet been used, taking care not to touch those originally allocated to relief for energy-intensive companies.”
