Dear fuel, the government cuts excise duties by 25 cents

Finally, the Government has passed the decree containing the measures against expensive energy. Decree with a total value of 4.4 billion euros which also includes an intervention to curb the race in fuel prices. As we had seen in recent days, the prices of gasoline and diesel had reached very high values, making a tank of fuel “very heavy” for the budgets of both families and companies.

As expected, the Government has decided to intervene on excise duties. Overall, there will be a cut of 25 euro cents per liter. This reduction was financed by adding the extra VAT on fuels in the last quarter of 2021 (308.2 million euros) and the “extraordinary levy on extraordinary profits“of energy producers.

We intend to tax a portion of the margin between active transactions for VAT purposes and passive transactions for VAT purposes in the last semester compared to the same semester a year ago. We will intervene where the increases in both percentage and absolute terms are significant. The percentage is 10%.

Beware, however, this measure will be valid only until the end of April. Therefore, it is a reduction that will have a very specific duration. But why this choice? The government officially explains that it intends to assess how the market will behave over the next few weeks. Then, eventually, it will be decided to extend the surgery.

One of the reasons for shortening the intervention period is also to see how the market performs in the coming days and weeks. We will follow and examine and then decide, but in the meantime it is important to try to go through this period of great volatility.

Therefore, towards the end of April, based on how the market will behave, the Government will decide how to move. The decree “urgent measures to counter the economic and humanitarian effects of the Ukrainian crisis“, as mentioned at the beginning, it is not limited only to interventions against expensive fuel. We find, in fact, among other things, measures on the front of gas and electricity increases as well as specific support for road transport, agriculture, fishing and tourism.

The cut in fuel prices will come the day after the publication of the decree in the Official Gazette.

Shortly after the announcement of the cut in excise duties by the Government, the first reactions arrived. Very critical, for example, is the position of the National Consumers’ Union which judges the reduction inadequate and insufficient. Following the cut in excise duties, in fact, the cost of fuel would not even return to pre-conflict levels, to pre-war values.

It is clear that 25 cents are better than 8.5, but it would still be an inadequate and insufficient drop. In recent days we had asked for double, at least 50 cents. In practice, even counting the VAT at 22%, the prices would reduce by about 30 cents, 30.5 cents, that is, taking the latest official data from the Mite, according to which petrol in self-service mode is sold on average to 2,185 euros per liter and diesel 2,155 euros per liter, the fuels would fall both below the threshold of 2 euros and below the threshold of 1.9 euros, but would not even return to pre-conflict levels, to pre-war values. Petrol, in fact, with the reduction of excise duties would reach 1.88 euros (it was 1.869 in the weekly survey of 28/02/2022) and diesel would even amount to 1.85 euros (it was 1.740 euros on 28/2). For the served, of course, it would be even worse.