Italy extends diesel fuel tax cut to August 25

The Italian government has extended a 17-cent-per-liter tax reduction on diesel fuel, originally set to expire on August 6, until August 25. This decision aims to provide relief from rising fuel prices during the crucial summer travel period.

The extension, covering 19 days, will cost approximately 245 million euros. The necessary funds will be sourced from cuts to ministerial budgets. Prime Minister Giorgia Meloni met with Deputy Prime Ministers Antonio Tajani and Matteo Salvini, and Economy Minister Giancarlo Giorgetti, to discuss the tax cut extension before the cabinet meeting.

Politically, allowing the discount to expire at the start of the August travel exodus risked significant public backlash from citizens and consumer associations. The government has already allocated over 2 billion euros since March to manage fuel prices, drawing funds from various sources including VAT increases on fuels and antitrust fines on energy companies.

Minister Giorgetti explained that ministerial spending was slightly reduced, acknowledging that departments were not entirely pleased but that the situation would be reviewed. The cabinet approved a decree-law to extend the discount from August 7 to August 24, with a further decree from the Ministry of Finance covering August 25.

Meloni stated on social media that the government is trying to contain the effects of price increases amid a complex international phase. From August 25, the "accise mobili" mechanism, which adjusts excise duties based on VAT increases, will be reinstated. This mechanism is self-financing but not immediate, as it relies on VAT collection.

Deputy Prime Minister Matteo Salvini dismissed suggestions that the discount could be funded by new taxes on cigarettes or alcohol, emphasizing a desire not to take with one hand what is given with the other. The actual impact of the extended discount remains to be seen, as the previous 17-cent reduction had minimal effect at the pump, with diesel prices around 2.097 euros per liter and gasoline at 1.999 euros, largely due to rising international oil prices.