Italy May Prolong Fuel Excise Duty Cut, Calls for EU Budget Flexibility
Italy's Response to Surging Energy Prices and EU Budget Rules
Potential Extension of Fuel Excise Duty Cut
ROME, April 28 (Reuters) - Italy may extend beyond May 1 a cut in excise duties on fuels as part of efforts to help families and firms cope with surging energy prices, Prime Minister Giorgia Meloni said on Tuesday.
"We are assessing a further extension, which might be shorter than the previous ones," Meloni told reporters following a cabinet meeting.
Government Support Measures
The prime minister also said her government had set aside almost 1 billion euros ($1.17 billion) to extend and reinforce some tax breaks designed to encourage employers to hire staff.
Italy has so far spent around 700 million euros to cut excise duties on petrol and diesel for just over 40 days until May 1.
Meloni said the new cut under discussion could have a greater impact on diesel than on petrol.
Energy Supply Vulnerabilities
Highly dependent on imported energy, Italy is particularly vulnerable to the disruptions to supplies caused by the U.S./Israeli conflict with Iran.
Calls for EU Budget Flexibility
Meloni called for the European Commission to loosen its rules in order to allow member states to help ease their energy costs by using budget leeway which is currently envisaged almost exclusively for defence and security spending.
"If you were to ask me today what defence and security expenditure entails, the energy issue would certainly be part of it," she said.
National Escape Clause and Defence Spending
Under a so-called 'National escape clause' or NEC, the EU allows countries to exceed the bloc's budget deficit limits to increase their defence spending, or in the case of exceptionally averse economic circumstances.
In the case of defence spending, the budget flexibility is available for four years between 2025 and 2028, with an increase in the deficit that must not exceed 1.5% of national output per year.
Italy last year planned to increase its defence spending by 0.15 percentage points of GDP in both 2026 and 2027, and by a further 0.2 percentage points in 2028.
Underscoring that the 0.15% increase would be worth 3.7 billion euros, Meloni said that capping energy prices was a "top priority" for her government.
Exchange Rate Information
($1 = 0.8541 euros)
(Reporting by Giuseppe Fonte, editing by Gavin Jones)
