Because the reduction of the cut in excise duties is a right and courageous choice
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The right, especially Salvini, reneges on years of promises and propaganda about petrol. But Meloni and Giorgetti’s decision reduces a very expensive and unfair discount, freeing up resources to protect the poorest from expensive energy
There are two ways to read this. The first is that of the umpteenth turnaround, of the betrayed promise or the word reneged: Matteo Salvini has been guaranteeing for years that once in government he would immediately cut excise duties, and instead his return as deputy prime minister coincides with an increase in excise duties already at the first manoeuvre. The other way is to do an objective evaluation the reduction of the cut in excise duties on fuel and admit that that of Giorgia Meloni, and of the Minister of Economy Giancarlo Giorgetti, is a choice as right as it is courageous.
It is a courageous choice because reducing the discount on petrol and diesel excise duties – going from the current cut of 25 cents which, inclusive of VAT, was equivalent to a discount of 30.5 cents at the petrol station, to a cut of 15 cents, which with VAT will translate into 18.3 cents less from 1 December – it is a highly unpopular measure, which displeases tens of millions of motorists, above all in a phase of crisis linked to the increase in energy prices. Not surprisingly, the decision of the government it is among the most contested by the opposition, from the M5s to the Pd, which FdI and Lega would surely have done with reversed roles. Nevertheless, without prejudice to the propaganda and hypocrisy of the parties, it is a question of a just and rational measurewhich the Draghi government probably should have done already a few months ago.
The first reason to limit excise tax rebates is that they cost too much: about 1 billion euros a month, or 12 billion a year. Furthermore, Italy has gone from one excess to another: if before on fuels we had the most excruciating tax in Europe, with the cut from 30 cents per liter introduced starting from March 2022 we have fallen well below the EU average, which also includes countries with per capita incomes much lower than ours. The scissoring decided by Minister Giorgetti should do save the state about 400 million euros a month, or almost 5 billion a year.
The second reason is that i fuel prices have come down a lot compared to the peak of the past months. According to data from the Ministry of Ecological Transition, the industrial price (net of taxes) of diesel in October 2022 is 1.146 euros per liter while in June it was 1.249 euros. For petrol, the drop is even more significant: in October 2022 the industrial price is 0.897 euros per liter while in June 2022 it was 1.188 euros. In practice, for petrol, the cost of which has undergone less tension than for diesel, the current price has almost dropped to pre-war levels (0.786 euros per liter in February). Therefore, if the price of fuel falls, it makes sense to reduce the discount.
The third reason for containing this cut, the most important, is that, like other measures adopted, it is a generalized benefit that is, aimed at everyone, without distinction of income. This, however, makes it a very unfair aid because of course it is the richest who consume a greater absolute quantity of fuels and, consequently, obtain a greater benefit while having the capacity to bear the costs. A study of theParliamentary Budget Office on the distributive effects of price increases and family support measures has clearly shown how the richest 10% of the population has benefited 6.5 times more compared to the poorest 10% of the 7.7 billion euros spent from March to October to lower excise taxes.
The way forward, to avoid wasting money, is to abandon generalized subsidies and design specific measures for the poorest, such as social bonuses based on ISEE or income. And other measures adopted by the government go in this direction, such as the 3 point cut in the tax wedge for the lowest incomes (cost: 4.1 billion) o the extension of the social bonus for energy to families with Isee up to 15 thousand euros. The government cannot pay everyone’s bills and fill up, in the face of a shock like this no country can do it, let alone one in debt like Italy. What it can do, and should do more of, is letting rising energy prices pass on to who can afford to pay them and focus efforts on the poorest and on businesses.
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