Italy Extends Diesel Tax Cut and Abolishes Car Tax Amid Fuel Price Surge

In early September, Italy's government faced mounting pressure as diesel prices climbed to levels not seen since March 2022. The diesel excise cut, introduced to provide relief from soaring fuel costs, was set to expire soon. As the deadline approached, fuel prices continued to rise, reaching over 2.2 euros per liter in many areas. The situation became a focal point for both consumers and political leaders, who debated how to provide relief without straining public finances.

On 10 September, the Italian cabinet approved a decree-law extending the 17-cent per liter diesel excise cut by one week, postponing its expiration to 17 September. This was the fifteenth intervention since fuel prices began surging in 2022, with the government having already spent over two billion euros on such measures.

In the following days, prices for diesel and gasoline kept climbing, with diesel hitting 2.231 euros per liter and even 2.3 euros on highways. The government began discussing new forms of support, including a one-time 100-euro fuel bonus for workers and self-employed individuals.

By mid-September, a cabinet meeting was scheduled to decide the next steps. The government prepared a draft decree that included both a further extension of the excise cut and the abolition of the annual car tax for small and medium vehicles as well as all motorcycles.

On 16 September, the cabinet officially announced the abolition of the car tax for qualifying vehicles and extended the diesel excise cut again, this time with a gradual reduction mechanism until 5 October.

As of mid-September, the diesel excise cut remains in place, now set to phase out by 5 October. The car tax for small and medium cars and motorcycles has been scrapped, affecting millions of vehicle owners. Fuel prices, however, continue to hover at historic highs. The government is still weighing further targeted support, such as one-time fuel bonuses, with decisions expected soon.

The next steps hinge on the government's ability to finalize targeted aid measures and decide whether to extend the excise cut further as prices remain unpredictable. The impact of the car tax abolition on household budgets and fuel demand will also be closely monitored in the coming weeks.