Italy cuts excise tax on diesel by 17 cents – limited until 6 August

Giorgetti pointed to the significantly steeper price increase for diesel compared with petrol as a result of international conflicts. The international context, in particular the tensions in the Middle East, had driven diesel fuel prices up disproportionately.

Giorgetti put the cost of the intervention at around 125 million euros. The tax cut is financed, among other things, through the system of variable excise duties, cartel fines, and funds from the structural policy measures fund.

Costs and financing

The average diesel price would still be around 2.015 euros per litre and thus above the two-euro mark, according to the government communication. According to calculations by the consumer protection association Codacons, a full diesel tank now costs around 8.50 euros less thanks to the tax cut.

The association called the relief insufficient, as it affects only diesel fuel and does not relieve drivers of petrol vehicles. Commuters with petrol engines in particular are also affected by the higher fuel prices.

Prime Minister Giorgia Meloni commented on the decision via the platform X. Meloni stated in a post on X that the cut would not solve the underlying problem. „Aber es ist eine rasche und verantwortungsvolle Antwort, die den begrenzten finanziellen Spielraum, über den wir verfügen, sowie die sich ständig wandelnde internationale Lage berücksichtigt."

Reaction from politics and consumer protection

Her government would monitor the development of the situation and prepare further steps, Meloni announced. She thereby acknowledged that the current relief can only be an interim step.

Giorgetti announced that the government would examine at the next cabinet meeting on Tuesday whether the development of tax revenues would allow an extension of the current measure. As early as 4 August, the government intends to once again discuss the development of fuel prices and decide on possible further action.

What happens after 6 August

What happens after 6 August is to be discussed at a council of ministers meeting next Tuesday. How long it will apply for, she wants to decide later. The duration of the tax cut is thus expressly open.

At the same time, he expressed the hope that the recently fallen Brent oil price would also lead to lower prices at the pumps in the coming days. If the burden on electricity and gas bills persists, the cabinet will take additional steps.

He also indicated possible budgetary room for manoeuvre in the autumn within the framework of a deviation from EU fiscal rules. This points to a broader debate on Italian fiscal policy if energy prices remain high.

Budgetary outlook and comparison with Germany

In Germany, the black-red coalition ruled out a further "tank discount" after the tax cut in May and June. While Berlin is thus taking a different course, Italy continues to rely on temporary interventions in excise duties.

The cabinet also extended support measures for road haulage until July, as well as a tax bonus for agriculture. The government is thus bundling several relief measures in a single decree.

A previously discussed increase in the tobacco tax to finance the diesel discount was not implemented. Funding thus remains through the system of variable excise duties, cartel fines, and funds from the structural policy measures fund.

Overall, the Italian government is walking a narrow fiscal tightrope with this latest intervention: on the one hand, consumers are to be relieved; on the other, budgetary room for manoeuvre is limited.

Observers see the step primarily as a signal to the economy and to diesel drivers that the government is responding to rising energy prices. The real test, however, will only come in late summer, when the cabinet decides on an extension.

The next test for Italian energy policy thus follows in a few weeks: on 4 August, the government intends to reassess fuel prices. Until then, it remains open whether and in what form the tax cut will continue beyond 6 August.