Italy announces 25c per litre drop in fuel price: will France follow suit?
Decree also provides for tax credits for haulers to prevent rises in consumer goods
Italian drivers benefit from the lower prices from March 19. Photo shows fuel pumps at a service station in Italy
Annavish/Shutterstock
Fuel prices in Italy have dropped by around 25c per litre following a government decree, making it the first major EU economy to directly intervene against rising prices following the outbreak of the conflict in the Middle East.
A decree-law, passed on Wednesday, saw a reduction in excise tax on fuels come into force from today (March 19).
"Starting in the next few hours, Italians will pay less than Germans, French, and Spanish [for fuel],” said Deputy Prime Minister and Transport Minister Matteo Salvini to Italian media.
The aid is temporary, with the bill initially covering a period of 20 days, with the aim of keeping diesel and petrol costs below €1.90 per litre. Diesel was around €2.10 per litre at the time the law passed.
The decree also included tax credits for road haulers “equivalent to the increase in fuel costs… in order to prevent the rise in diesel prices from being passed on to the prices of consumer goods,” said Prime Minister Giorgia Meloni on social media X. This measure also impacts fuel purchases by fishing vessels.
The emergency decree also includes an ‘anti-speculation mechanic’, which aims to ensure “the price charged to consumers by oil companies and distributors is strictly indexed to the actual evolution of crude oil prices internationally,” said Miss Meloni.
“This will allow us to immediately stop unjustified price increases and guarantee that oil companies and distributors lower their prices in line with the decline in crude oil prices internationally.”
French drivers close to Italy may be tempted to cross the border and benefit from the lower prices.
Will France follow suit?
Alongside Italy, fellow EU member state Portugal has also extended measures that reduce fuel taxes, although only by around 1.8c per litre for petrol and 3.3c per litre for diesel.
The Spanish government said last week that it is planning to introduce measures similar to those seen in 2022 during the outbreak of the war in Ukraine. Notably, this included a reduction in VAT on electricity (down from 20% to 5%), and a 20c per litre reduction of fuel prices at the pumps. No rules have come into force as of March 19.
In Serbia (a non-EU country), fuel duties have been cut by 20% in an effort to soften the blow of rising fuel prices at the pumps.
The German government is planning a bill to strengthen fuel price controls and prevent service stations and fuel suppliers from price gouging.
For its part, the French government has not committed to any legislative action.
It is reportedly planning measures to cap profit margins of fuel suppliers, however no official announcement on this has been made, and the price checks it ordered to take place on service stations have come to an end.
The government has repeatedly said it is too early for direct intervention against rising fuel prices, either through subsidies or tax cuts.
Head of the Intermarché supermarket group Thierry Cotillard called on the government to reduce fuel taxes earlier this week, and it has been a long-standing policy of the far-right Rassemblement National to cut VAT on energy including fuel from 20% to 5%.
Estimates that measures implemented following the outbreak of the war in Ukraine cost the state more than €70 billion has led to apprehension over the introduction of any new aids.
Any such measures would see government spending spike (or if implementing VAT cuts on fuel, revenues drop), leading to further government debt and difficulties passing the 2027 budget.
