Italy extends diesel excise tax cut to Sept. 5, plans income-based support

The Italian government has decided to extend the 17-cent-per-liter excise tax cut on diesel fuel through September 5. This measure aims to curb the rising cost of fuel during the peak of the summer travel season, with an estimated cost of approximately 130 million euros.

Following this extension, the government is committed to introducing new support mechanisms that will be "selective based on income," as stated in the Council of Ministers' decree. Prime Minister Giorgia Meloni has urged for swift action on these future measures, which will be evaluated in the coming days, focusing on both their form and financial coverage.

The funding for the current excise tax reduction is derived from a novel mechanism within the same decree: an advance fiscal payment of taxes on dividends from large energy companies. Government sources described this measure as "unprecedented" and reportedly agreed upon with the involved groups, likely impacting companies such as Eni.

This advance payment, potentially set at 39% according to a draft of the provision, would grant the companies an equivalent tax credit. The mechanism differs significantly from previous agreements and is distinct from the ongoing debate surrounding windfall taxes on energy profits, which has caused friction between the Lega and Forza Italia parties.

The decision to extend the diesel tax cut, taken just before the Council of Ministers meeting, followed discussions involving Economy Minister Giancarlo Giorgetti. While options ranged from ending the cut on September 4 or extending it to September 7, the chosen date covers most of the first week of September, a period expected to see heavy highway traffic. Deputy Prime Minister Antonio Tajani indicated that future aid would be "structural but targeted," aiming to assist lower and middle-income individuals and businesses.

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structural but targeted, which can help especially the weaker classes, the middle class, and help businesses