Italy to tax energy profits to ease price burden on households

Italy on Friday announced it would tax the extra profits made by energy firms off the back of spiking prices to help families and businesses struggling with high bills.  

Italy to tax energy profits to ease price burden on households
Italy's Prime Minister, Mario Draghi has announced a deal to import gas from Algeria. (Photo by Tiziana FABI / AFP)

“Let’s tax a part of the extraordinary profits that producers are making thanks to the increase in the cost of raw materials, and redistribute this money to businesses and families who are in great difficulty,” Prime Minister Mario Draghi told reporters.    

Economy and Finance Minister Daniele Franco told the same news conference that the tax would be 10 percent on a portion of the extra profits made, although the details were not yet clear.    

A government source told AFP it would be levelled on a measure of extra profits made in the last six months, compared to the same period the year before.

READ ALSO: Italy announces plan to end reliance on Russian gas by 2025

The money will help fund a new 4.4 billion-euro package to ease the pain of high energy prices, Draghi said, which comes on top of 16 billion euros already spent in recent months.   

The package will also be funded by extra tax revenue generated by the increase in energy prices and will not require additional borrowing, the source told AFP.

Countries across Europe are urgently seeking policies to ease the pain of high energy prices, which were already high and sent soaring by Russia’s invasion of Ukraine.

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

Among the new Italian measures intended to address what Draghi called a period of “major volatility” are a cut in excise duty on petrol, to reduce the pump price by 25 euro cents a litre for one month only.    

The government will also freeze energy bills at last summer’s prices for another 1.2 million households, bringing the total to 5.2 million.

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Italian energy company to start paying for Russian gas in rubles

Italian energy company Eni confirmed it is opening accounts in rubles with Gazprombank to pay for gas supplies, complying with Moscow's demands.

Italian energy company to start paying for Russian gas in rubles

Eni said in a statement on Tuesday it was opening accounts in rubles and euros with Gazprom Bank “on a precautionary basis” as “deadlines for the payment of gas supplies are scheduled for the next few days”.

It was not immediately clear whether the move would fall foul of European Union sanctions, although Eni said it was “not incompatible”.

The company said its decision to open the accounts was “taken in compliance with the current international sanctions framework” and that Italian authorities had been informed.

READ ALSO: Italy will ‘soon’ stop buying gas from Russia, says minister

Vladimir Putin demanded at the end of March that payment be made in rubles or the gas supply to European countries would be cut off, as he hit back at sanctions placed on Russia by EU countries following its invasion of Ukraine.
Eni’s CEO Claudio Descalzi said at the time that his company would not comply with the demands, saying “Eni doesn’t have rubles” and “the contracts say fuel payments should be made in euros”.
But many European companies and their lawyers have since been looking at ways to meet the demand without breaching sanctions aimed at punishing Russia for the war in Ukraine, reports Bloomberg.
EU officials had said opening a ruble account would breach sanctions. But its latest guidelines, to be published this week, are expected to stop short of banning bank accounts in rubles and  therefore allow companies to keep buying Russian gas, Bloomberg reports.
Like other European countries, Italy says it is working to reduce its heavy reliance on Russian energy imports in the wake of the Ukraine war.

But the Italian government has so far resisted calls to boycott Russian oil and gas.

Italy is highly dependent on Russian gas, importing 95 percent of the gas it consumes, of which around 40 percent comes from Russia.