Fuel crisis: Italy urged to cut tax as petrol prices reach record high

With fuel prices in Italy surging to new highs of over €2 euros a litre, business and consumer groups said the government must slash VAT to keep the country moving.

Fuel crisis: Italy urged to cut tax as petrol prices reach record high
Filling up your tank in Italy is becomig prohibitively expensive as the country sees the highest fuel prices on record in early March 2022. Photo by MIGUEL MEDINA / AFP

The average price at the pump in Italy is now at an average of €2.2 per litre for self-service petrol/gasoline and €2.3 for diesel, according to Italian consumer watchdog Codacons.

This means the price of petrol has risen by 39 percent in a year, and diesel prices have risen by 51 percent, the association said.

Italy’s fuel prices are the highest in Europe after the Netherlands, according to analysis by consumer finance website

READ ALSO: How to save money on your fuel in Italy

Although fuel prices have been on an upward trend in Italy since May 2021, petrol and gas prices have skyrocketed since Russia’s invasion of Ukraine: Russia is the world’s third-largest oil producer and second-largest exporter..

But this doesn’t fully account for the price rises. Other factors affecting the price you’ll pay at the pump in Italy include the 22 percent VAT rate, plus excise duty (a tax on the production and consumption of goods).

Codacons said taxation has now reached 55.3 percent on every litre of petrol and 51.8 percent on diesel.

Representatives of Italy’s business and consumer groups have urged the Italian government to provide financial help to prevent further price rises, as some sectors including hauliers say they can’t afford to operate.

Industry association Confindustria on Monday urged the government to do more to offset the price rises.

“The costs of petrol and diesel at the distributor have reached an all-time high in recent days,” President of Confindustria in the southern Italian city of Brindisi, Gabriele Menotti Lippolis said in a statement to the press.

He said fuel distributors were benefiting from rising prices, “but also the State, which is taking higher tax revenues thanks to the VAT paid on fuel prices.”

“In the last week alone, the extra revenue gained [from VAT] is up by approximately 45 million euros compared to in the second week of February.”

He urged the government to use this money “to support families and businesses” while freezing VAT on fuel “for a few months to immediately reduce prices”.

Though the government hasn’t indicated how it plans to address the increases, Italy’s Minister for the Ecological Transition meanwhile blamed the price surge on speculation.

The fuel price rises “are a colossal swindle against Italian companies and citizens,” Minister Roberto Cingolani told Sky TG 24 news on Friday.

“There is no technical reason for these increases,” he said, describing it as “a speculative spiral from which a few profit”.

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Italy’s Meloni in Libya to discuss energy and migration

Italian Prime Minister Giorgia Meloni arrived on Saturday in the Libyan capital Tripoli for talks on energy as well as the thorny issue of migration, Libyan state media said.

Italy's Meloni in Libya to discuss energy and migration

Meloni’s trip – her second to a North African country this week – is the first by a European leader to war-battered Libya since her predecessor Mario Draghi’s visit in April 2021.

State television said the Italian premier was received by Abdelhamid Dbeibah, who heads the Tripoli-based, UN brokered Government of National Unity which is contested by a rival administration in the east.

Libya and its former colonial power Italy are key trade partners, particularly in energy, where Italian giant Eni plays a major role in tapping into Africa’s largest known oil reserves.

Meloni was accompanied by Eni chief Claudio Descalzi, who is expected to sign a deal with Libya’s National Oil Company to develop two Libyan offshore gas fields.

Eni will invest $8 million in the two fields, NOC chief Farhat Bengdara said in televised remarks this week, adding they are expected to produce 850 million cubic metres of gas.

Meloni visited Algeria on Monday seeking supply deals from Africa’s top gas exporter to help reduce reliance on Russia after it invaded Ukraine last year.

During her trip to Libya, she is also expected to discuss the issue of migration amid rising numbers of irregular migrants from Libya to Italy.

Libya has been wracked by years of conflict and division since a NATO-backed revolt toppled dictator Moamer Kadhafi in 2011.

The country is a conduit for thousands of people each year fleeing conflict and poverty across Africa, seeking refuge across the Mediterranean in Europe.

Meloni’s far-right government took office in October, vowing to stop migrant landings in Italy, which reached more than 105,000 in 2022.

The central Mediterranean route is considered the world’s most treacherous, according to the International Organization for Migration, which estimated that 1,377 migrants had disappeared on that route last year.