ROME, Feb 18 (Reuters) - Italy will hike by two percentage points its IRAP corporate tax rate applied to energy firms, Prime Minister Giorgia Meloni said on Wednesday. The tax increase weighs on
Italy to Hike Energy Firms' Corporate Tax to Fund Bill Relief
By Giuseppe Fonte and Angelo Amante
IRAP Hike and Energy Bill Relief Package
ROME, Feb 18 (Reuters) - Italy approved a two-percentage-point hike in its IRAP corporate tax on energy firms, Prime Minister Giorgia Meloni said on Wednesday, to help fund a package of measures aimed at cutting bills paid by families and energy-intensive businesses.
Projected Revenue and Funding Uses
The move is expected to bring the government around 1 billion euros ($1.18 billion) in extra revenue through 2028, a decree seen by Reuters showed, which will then be used to fund the planned cuts to energy bills.
Support for Households and Businesses
"The package will have a significant impact, guaranteeing benefits for households and businesses worth over 5 billion euros," Meloni said in a video posted on social media platform X, without providing any time frame.
Context: Italy’s Energy Costs
Power costs in Italy are significantly higher than in France and Spain, as the country is heavily dependent on imported gas to produce electricity and is therefore vulnerable to changes in international prices and geopolitical tensions.
IRAP Rate Change Details
Under the scheme, the IRAP tax rate is expected to increase from 3.90% to 5.90% for all companies that produce, distribute, and supply energy products.
Meloni added a bonus helping poorer families to pay their bills would rise to 315 euros from 200.
EU APPROVAL NEEDED
EU Approval and ETS-Related Measures
The package also includes measures to narrow the difference between wholesale gas prices on the Amsterdam hub, and those in Italy, where more than 40% of electricity is produced with gas.
TTF vs. PSV Price Gap
Depending on market trends, the wholesale price for natural gas traded on the Italian market, the PSV, is normally higher than the TTF, which is traded in Amsterdam, by some 2-4 euros per megawatt hour.
Reimbursements for Thermoelectric Producers
Rome plans to offer reimbursements to some thermoelectric producers as a way to mitigate the negative impact of the Emission Trading System on the bills, a move that requires backing from European Union authorities before being adopted.
The ETS, which is the EU's most important climate change policy, forces power plants and industries to buy CO2 permits when they pollute, and caps the amount of permits in the market, to curtail emissions over time.
Criticism and Market Reactions
Climate change think-tank ECCO said in a statement the ETS move would put Italy on a collision course with the EU to defend the interests of fossil fuel-based producers.
Rome's way to lower wholesale energy prices has drawn widespread criticism from companies that fear the measures would erode their profits and hit investments in green projects.
EDF/Edison Capital Plans
French nuclear group EDF could revise — or even shelve — its plan to open up the capital of its Italian subsidiary Edison due to regulatory changes, Edison's chief executive said on Wednesday.
Exchange Rate Note
($1 = 0.8469 euros)
(Reporting by Giuseppe Fonte and Angelo Amante in Rome; Additional reporting by Francesca Landini in Milan; Editing by Gavin Jones and Daniel Wallis)
