Italy Eyes Bridge Intervention on Fuel, Focus on Diesel

The Italian government is preparing an "intervention ponte" or bridge measure to address soaring fuel prices, with a particular focus on diesel. This short-term relief package is slated for implementation as early as next week. The move aims to provide immediate support and signal government action ahead of the busy August travel period.

The strategy involves leveraging anticipated VAT revenue from July to fund excise tax adjustments. This approach allows for immediate action while the government awaits clearer financial figures from the Ministry of Economy and Finance (MEF). Prime Minister Giorgia Meloni has been actively discussing the complex issue with Economy Minister Giancarlo Giorgetti to find effective solutions.

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If the resources are found, in addition to this which has general effects, targeted measures could be taken, as we have already done for road haulage with the tax credit.

However, securing the necessary funds remains a challenge, as fuel prices show no signs of abating. Data from the Ministry of Enterprises and Made in Italy (Mimit) shows diesel at 2.18 euros per liter and gasoline at 1.98 euros per liter. Minister of Enterprises and Made in Italy, Adolfo Urso, explained that the initial measure would target diesel, with broader excise tax adjustments to follow once July's VAT surplus is confirmed. He also noted the possibility of targeted measures, similar to the tax credit for road haulage, if sufficient resources are found.

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In the Council of Ministers scheduled for August 4th, we will be able to assess the available resources.

Urso indicated that the Council of Ministers on August 4th would assess available funds. The government has already allocated approximately 1.8 billion euros for fuel cost relief between March and early July. Future actions may also depend on funds becoming accessible in September, linked to a budget deviation request to the European Union following parliamentary resolutions.

Political support for intervention is strong within the majority. Maurizio Lupi, president of Noi Moderati, emphasized that combating high energy costs is a priority, with plans to utilize 14 billion euros in EU flexibility funds for families and businesses. Luca Squeri of Forza Italia stressed the obligation to implement excise tax adjustments to offset VAT increases, contingent on MEF's resource availability.

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For the government and the majority, combating high energy costs is a priority, and indeed we have decided to activate the EU's 14 billion euros in flexibility as quickly as possible to support families and businesses.

Opposition parties, however, have voiced criticism. The Five Star Movement (M5s) dismissed the proposed excise tax measure as a "band-aid" and advocated for targeted fuel bonuses for vulnerable groups. Angelo Bonelli of the Greens and Left Alliance (Avs) argued that excise tax adjustments are temporary and insufficient, calling instead for a windfall tax on oil company profits and accelerated electrification. The center-left has submitted a motion for an urgent measure to mitigate the impact of fuel prices on household purchasing power and business costs, seeking a vote by Tuesday.

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At a minimum, we are obliged to implement the mobile excise taxes, sterilizing the incremental part of the VAT. For the rest, it depends on the availability of resources, and that is up to the MEF.