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COST OF LIVING

Fuel tax cut and help with energy bills: Italy approves inflation aid package

Italy on Thursday night approved new measures worth around 17 billion euros ($17.4 billion) to help families and businesses manage the surging cost of fuel and essentials.

Fuel tax cut and help with energy bills: Italy approves inflation aid package
New aid measures announced on Thursday are hoped to boost Italy's consumer spending power as the cost of everyday goods rises. Photo by Vincenzo PINTO / AFP)

As expected, the final version of the ‘aiuti-bis‘ decree provides another extension to the existing 30-cents-per-litre cut to fuel duty, more help with energy bills, and a tax cut for workers earning under 35,000 euros a year.

The package also includes further funding for mental health treatment: there’s another 15 million euros for the recently-introduced ‘psychologist bonus’ on top of the 10 million previously allocated.

READ ALSO: What is Italy doing to cut the rising cost of living?

There are also measures to help agricultural firms deal with this year’s severe drought.

Italian Prime Minister Mario Draghi described the new package as an intervention “of incredible proportions”, which corresponds to “a little over 2 points of national GDP”.

However, he said, no changes were made to the national budget to pave the way for the new measures.

The measures will be funded with 14.3 billion euros in higher-than-expected tax revenues this year, and the deployment of funds that have not yet been spent, Economy and Finance Minister Daniele Franco said.

Italy has already budgeted some 35 billion euros since January to soften the impact of rising fuel costs.

The decree is one of the last major acts by outgoing Prime Minister Mario Draghi before an early general election next month.

Elections are set for September 25th but the former European Central Bank chief is staying on in a caretaker role until a new government is formed.

Draghi said the Italian economy was performing better than expected, citing the International Monetary Fund’s estimate of three percent for 2022.

“They say that in 2022, we will grow more than Germany, than France, than the average of the eurozone, more than the United States,” he told a press conference.

But he noted the many problems facing Italy, “from the high cost of living, to inflation, the rise in energy prices and other materials, to supply difficulties, widespread insecurity and, of course political insecurity”.

Inflation hit 8 percent in Italy in June – the most severe spike the country has experienced since 1976.

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ITALIAN ELECTIONS

Italy’s hard right set for election victory after left-wing alliance collapses

An Italian centre-left election pact broke down on Sunday just days after it was formed, leaving the path to power clear for the hard-right coalition.

Italy’s hard right set for election victory after left-wing alliance collapses

The alliance between Italian centre-left parties was left in disarray on Sunday night, potentially meaning a landslide victory for the hard-right coalition at early general elections in September.

The leader of the centrist Azione party withdrew support for the left-wing coalition led by the Democratic Party (PD) just five days after the two joined forces, saying it could not work with left-wingers brought in to boost the alliance.

Carlo Calenda, leader of Azione, withdrew his support on Sunday after PD made another pact with smaller left-wing parties including the radical Sinistra Italiana, and new green party Europa Verde.

“You cannot explain (to voters) that to defend the constitution you make a pact with people you know you will never govern with,” Calenda told newspaper Corriere della Sera.

The news was greeted with jubilation by hard-right League leader Matteo Salvini, who tweeted: “On the left chaos and everyone against everyone!”

Giorgia Meloni, leader of the neofascist Brothers of Italy party (FdI) mocked a “new twist in the soap opera of the centre-left.”

READ ALSO: Italy to choose ‘Europe or nationalism’ at election, says PD leader

Analyists predict the centre-left split could hand the right-wing bloc a landslide victory at the election on September 25th, with Meloni tipped to become Italy’s first female prime minister.

Italy’s political system favours coalitions, and while Meloni has a strong alliance with Salvini’s League and Silvio Berlusconi’s Forza Italia, Letta is struggling to bring together the disparate  progressive parties.

The PD is neck and neck with Brothers of Italy in the latest opinion polls, but even in partnership with Azione, the group most recently polled at 33.6 percent, compared with 46.4 percent for the right.

Political commentators said the only hope PD has now of posing a credible threat to the right-wing alliance would be by partnering with the Five Star Movement.

READ ALSO: Why has Italy’s government collapsed in the middle of summer?

However, Letta has repeatedly said this is out of the question, as he blames M5S for triggering the political crisis that brought down Mario Draghi’s broad coalition government.

“Either PD eats its hat and seeks alliance with M5S to defeat the right-wing coalition, or it’s hard to see how the right can possibly lose the forthcoming election,” Dr Daniele Albertazzi, a politics professor at the University of Surrey in England, tweeted on Sunday.

Early elections were called after Draghi resigned in late July. His government currently remains in place in a caretaker role.

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