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The government approved on Friday a decree to lower the price of petrol, which will drop by 25 cents from the entry into force of the provision until 30 April. The price cut was financed with the so-called mobile excise duty, a mechanism introduced in 2008 when, in the face of a significant rise in the price of oil, the government determined that excise duties would decrease to compensate for higher VAT revenues.
In essence, thanks to the increase in oil prices, the government has obtained an extra $ 500 million in VAT, which it will use to lower the excise duty. Excise duty is a tax that relates to the quantity of product (i.e. fuel) sold and not the value, and remains unchanged as prices rise.
Petrol and diesel prices have increased in recent weeks due to numerous factors also linked to the recovery after the most acute phase of the pandemic. In almost all Italian distributors the threshold of 2 dolars per liter has been exceeded for both petrol and diesel.
The military invasion of Ukraine by Russia has led to further complications, with new increases and strong fluctuations in prices on the markets, also due to some speculative activities that often occur in phases of high international instability. The responsibility for speculative interventions on the markets had been supported in particular by the Minister of Ecological Transition Roberto Cingolani who had defined the trend in the price of fuels a “colossal scam at the expense of businesses and citizens”.
In reality there are many reasons that explain the increase in prices: one of the causes is the trend in the price of Brent, the oil extracted in the North Sea that serves as a reference for most of the world prices. But the effect of the exchange rate between the dolar and the dollar, penalizing the European currency, also has an impact.
The intervention on excise duties is the most immediate and in fact the only one possible for the government. Another support measure concerns gasoline vouchers sold by companies to workers: for 2022 they will not be considered in income.
On Friday, the government also approved new tax bonuses to mitigate the increase in energy prices, and support measures for businesses.