Il fuel cost has inflamed public debate over the last few weeks. What ended up in the dock was, mainly, the decision of the Meloni Government not to extend the cut in excise duties during 2023. The new Executive, after the controversies of the last few weeks, played in advance: in fact, it inserted within the Fuel Decree, a rule that will allow him – in the event that he deems it appropriate – to cut excise duties. In other words, a measure introduced by the Minister has been dusted off Pier Luigi Bersaniintroduced through the 2008 Budget Law.
We are talking, in a nutshell, of what is known as themobile excise duty. The measure is provided directly by the Fuel Decree and allows the Government to cut some of the taxes, which are due on petrol, methane, gas and LPG. The cut can be made when the prices, at the distributor, should exceed certain thresholds.
How the mobile excise works
Let’s try to understand how they work mobile excise duties. Across the Documentation of Economic-Financial Planning (the so-called DEF), the Government establishes a maximum threshold for the price of fuel. The mobile excise mechanism provides for the reduction of taxes when the price of diesel and petrol were to exceed the average price of the previous two months. Obviously, the one indicated in the DEF will always be taken as a reference.
But why are we talking about mobile excise duties? As we have explained, this mechanism allows the Executive to cut fuel taxes: this solution should make it possible to deal with an emergency situation caused by the increase in prices, which have exceeded a certain threshold. So it is a cut that occurs when prices exceed certain thresholds and not when they are below these: for this reason it is mobile. The name derives precisely from the fact that the fixed amount becomes mobile: it therefore changes according to the fuel price trend, according to an inverse mechanism. As fuel goes up, the tax goes down. In the event that the first value should decrease, the tax returns to its original value.
When the excise cut comes
Thanks to the mechanism we have just described, the cut in excise duties will come when there is an increase in fuel prices.
In a nutshell, the cut will take place when the average price exceeds that recorded during the two-month period preceding the period under consideration. To provide information on average fuel prices the DEF will take care of it directly.
Mobile excise: a shield against price increases
To compensate for the discounts made thanks to the mobile excise duty will be the higher VAT revenues, which will reach the Treasury following the increase in fuel prices. Basically this means that the excise cut is financed directly by the VAT, which is collected following the price increase.
A question that our readers can legitimately ask at this point is the following: by how much fuel prices will have to rise, why are the reductions triggered? There is no answer to this question, because the Fuel Decree published in the Official Journal on 14 January 2023 does not specifically indicate it. Only the possible decrease in the price of fuel compared to the average of the previous quarter is taken into consideration.
The Fuel Decree, through article 2, directly modified i paragraphs 290 and 291 of article 1 of Law no. 244/07through which the Prodi government had introduced the mobile excise mechanism, to deal with increases in the price of oil.
On that occasion the mechanism was intended to control the price of petrol and diesel, which were involving Europe and Italy in particular. The intent was to protect consumers and, at the same time, not burden the public finances too much, by financing the cut in excise duties with the highest VAT revenue.
The project of the Meloni government today, like that of the Prodi government in the past, is to sterilize excise duties as much as possible and reduce its impact on consumers’ pockets. The aim is to govern the prices of the distributor of energy products.
