The Minister of Economy Giancarlo Giorgetti and the Minister for Business and Made in Italy Adolfo Urso (ANSA/Riccardo Antimiani)
Speaking in the Chamber, Minister Urso made it clear that he will not intervene to reduce excise duties and thus lower prices, which have started to rise again due to the increase in oil prices
Since the end of January, fuel prices have started to rise again: while in the week of January 15th petrol cost on average 1.77 euros per liter and diesel 1.72, since the latest surveys the prices have risen to 1.9 and 1 respectively, 8 euros. The increases are due to the rise in the price of oil, therefore of the raw material used to produce fuel and which for weeks has been affected above all by the growing uncertainty in the Middle East caused by the war between Israel and Hamas.
The increases in fuel prices therefore depend on international situations that have little to do with the actions of the Italian government. In recent days, however, he has been the subject of much criticism from consumer associations and opposition parties for the fact that he is not doing anything to at least mitigate these increases, intervening on the part over which he would actually have power: that of taxes on fuels, such as VAT and excise duties, which represent more than half of the final price that consumers pay at the petrol pump.
However, the government has made it clear that it currently does not intend to do so. And this does not depend only on the fact that he already has little money available for the measures he wants to introduce, but also on the fact that for some time reducing the cost of fuel no longer seems to be a priority for the parties that support him – Brothers of Italy, Lega and Forza Italia – despite the fact that when they were in opposition they were always very vocal about the reduction of excise duties.
In January last year the government ended up in another similar controversy because it had decided not to refinance a discount on excise duties that had been introduced by Mario Draghi’s government, to mitigate the increases in fuel prices due to the war in Ukraine. The price of fuel rose instantly, but Prime Minister Giorgia Meloni still defended that decision: she said that there were no resources to refinance the discount, and towards those who accused her of inconsistency with her positions in the past she said that “yes they deal with the reality with which they measure themselves.”
Prime Minister Giorgia Meloni during the video of “Giorgia’s Notes” in which she spoke about the decision on excise duties on fuel (LaPresse/Palazzo Chigi/Filippo Attili)
And the reality is that, despite having been talking about it for years, reducing excise duties is very expensive, because they guarantee the State a high revenue which is difficult to renounce: for example, the discounts envisaged by Draghi’s government were 30.5 cents for each liter of fuel (just over a third of all excise duties), and cost around a billion a month. Furthermore, Italy is the European country with the highest taxes on diesel, and the second for those on petrol: according to the latest monitoring by the Ministry of the Environment and Energy Security, VAT and excise duties amount to a total of 56.4%. percent on the price of petrol and 52.4 on that of diesel.
The reduction of excise duties on fuel is a measure considered unfair by most economists and experts: it reduces taxes for everyone, regardless of income, and it does so on a good whose consumption should also be discouraged, because fossil fuels are among the main responsible for polluting emissions and therefore global warming.
As happened last year, the opposition parties are however strongly criticizing the government, because it is very open to attack on this issue and for political convenience. Sometimes they do so by going against some of their priorities, such as the decarbonisation of the economy, shared by much of the centre-left: the Democratic Party speaks of «yet another promise betrayed by the Meloni government», the 5 Star Movement of a promise that has gone up in smoke «as family savings” and also exponents of Italia Viva e Azione draw attention to the fact that the cut in fuel taxes has been an electoral theme for right-wing parties for a long time.
During the question time on Wednesday in the Chamber of Deputies, a weekly scheduled moment in which parliamentarians are allowed to ask direct questions to government ministers on agreed issues, Italia Viva MP Maria Chiara Gadda asked the Minister of Business and Made in Italy Adolfo Urso if imminent interventions are expected to reduce fuel prices: Urso did not directly answer the question, but said that prices in recent weeks are not the same as in 2022, when the excise duty discount was introduced by Draghi’s government. Between the lines he made it clear that the government does not consider the recent increases to be such as to justify an intervention to reduce excise duties like the one that was envisaged at the time.
On Tuesday, the Minister of Economy Giancarlo Giorgetti, in the press conference with which he presented the Economic and Financial Document (DEF), said that the price of petrol “does not depend on the government’s decisions” and that no additional interventions are foreseen in addition to those already in place.
«There is already a provision which triggers an adjustment in relation to price changes. If the foreseen circumstances occur, it will start,” said Giorgetti, who referred to an automatic mechanism introduced by the government in March last year. It’s never yet. It has never yet been activated and provides that if the price increases beyond a certain threshold, the greater revenue collected by the State through VAT – which is a percentage of the value of the product, therefore the tax revenue increases if the price increases – they will be invested to lower excise duties on the fuels themselves.
The government had also attempted to intervene qualitatively on the price of petrol, with measures that did not involve the use of economic resources. For example, in March last year it introduced some measures to increase competition and transparency among fuel distributors, attempting to limit alleged speculation by petrol station attendants, who according to the government were driving up prices at the pump by applying profit margins that were too generous and unjustified.
Despite the absence of clear evidence that there was actually speculation, since last August and for a few months petrol stations have been forced to display the average price of fuel on signs positioned next to the selling price they were offering: the managers of petrol stations on motorways they had to display the national average price, while all the others the regional one, based on the data provided every day by the Ministry of Business and Made in Italy.
A sign with average prices displayed in a petrol station in Milan, in August 2023 (Alessandro Bremec/LaPresse)
This measure never really worked and actually led to a lot of confusion among petrol station attendants, who appealed to the TAR (regional administrative court), which finally annulled the rule. The decision was then confirmed by the Council of State, the second instance administrative court.
During the question time Urso then said that he will shortly present, together with the Minister of the Environment and Energy Security, a broad project for the reform of the fuel distribution system, of which he anticipated in a rather vague and concise way three types of interventions: the more precise regulation of the system with which authorizations are granted to those carrying out the distribution; some measures to avoid situations of abuse in the relationship between large energy companies and small distributors; the reduction of petrol stations in the area, closing inefficient ones and encouraging the conversion towards electric systems. However, they are structural interventions, which will probably have a long parliamentary discussion and which in any case are unlikely to provide an immediate response to the price increases of recent weeks.
– Read also: What are excise taxes on petrol
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