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Italy: Govt to tax energy profits to ease price burden on households

Italy stated on Friday, March 18, that the government would tax energy companies' additional earnings due to rising prices to assist people and businesses dealing with high bills.

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Italy stated on Friday, March 18, that the government would tax energy companies’ additional earnings due to rising prices to assist people and businesses dealing with high bills.

“Let’s tax a portion of the extraordinary gains that producers are generating as a result of the increase in the cost of raw materials and redistribute the money to struggling businesses and families,” Prime Minister Mario Draghi told reporters.

Moreover, Economic and Finance Minister Daniele Franco told the same news conference that the tax would be 10 % on the part of the extra gains made, although the details were unclear.

A government source told the correspondent that it would be based on a measure of extra earnings made in the last 6 months as compared to the same period the year before.

Furthermore, Draghi said the money would go toward a new 4.4 billion euro package to help people cope with rising energy prices, which comesĀ on top of the 16 billion euros already spent in recent months.

The source said that the package will also be funded by additional tax revenue generated by increased energy costs and will not require additional borrowing.

In addition, countries all around Europe are scrambling to find policies to alleviate the agony of high energy prices, which were already high before Russia’s invasion of Ukraine pushed them much more elevated.

A drop in excise duty on gasoline, which would reduce the pump price by 25 euro cents a litre for one month only, is one of the new Italian measures aimed at addressing what Draghi described as a period of “significant volatility.”

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

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