Italy Eliminates Road Tax for Most Cars in 2027 to Ease Voter Pressure
Government Announces Major Tax Relief Ahead of 2027 Election
By Giuseppe Fonte and Angelo Amante
ROME, Sept 16 (Reuters) - Italy said on Wednesday it would scrap road tax for 14.5 million cars and motorcycles from next year, in a move expected to cost the country's strained state coffers more than €2 billion ($2.3 billion).
The decision comes as the government seeks ways to boost support ahead of a national election in 2027.
Political Context and Motivations
Prime Minister Giorgia Meloni's conservative coalition is trailing the centre-left in the polls and faces pressure from National Future, a new far-right party led by former general Roberto Vannacci which is steadily gaining ground.
"Today, the government is eliminating one of the taxes most hated by Italians," Meloni said in a statement.
Who Benefits from the Tax Cut?
The benefit will apply to all motorcycles and more than 70% of small- and medium-sized cars, but citizens will be entitled to use it for just one properly insured vehicle.
Government’s Tax-Cutting Agenda
"We chose to continue our tax-cutting agenda, in line with the approach the centre-right has pursued on previous occasions," Meloni told a news conference after a cabinet meeting that approved the plan.
Financial Implications and Implementation
Details of the Exemption
Under a draft decree seen by Reuters, the exemption would apply only in 2027 to vehicles with a maximum power output of 80 kilowatts (kW), at an estimated cost of €2.36 billion.
Possibility of Making the Measure Permanent
Economy Minister Giancarlo Giorgetti said Rome would try to make the measure permanent, meaning it was structured as a one-off for the moment.
An official added the government could intervene to put it on a more permanent footing through next year's budget to be unveiled in October.
Funding Uncertainties
Neither Meloni nor Giorgetti clarified where the money needed to cover the initiative would be found.
Under its most recent budget plan, due to be updated in the next few weeks, Italy sees its public debt peaking at almost 139% of gross domestic product (GDP) this year, replacing Greece as the euro zone's most indebted country.
Criticism and Broader Economic Concerns
Opposition Reactions
CRITICS DISMISS MOVE
Meloni told the news conference that she intended to remain in office until the end of the legislature. This month she became Italy's longest-serving prime minister since World War Two, and her term in office is due to expire in autumn 2027.
Critics dismissed the initiative as a bid to divert attention from rising electricity, gas and fuel costs.
"It's like treating pneumonia with a throat lozenge," said Rossano Sasso, a senior aide to Vannacci.
Other Government Measures on Fuel and Energy
In a bid to soften the impact of fuel price rises, Meloni has adopted and extended several forms of temporary excise duty cuts in recent months, spending around €2.8 billion so far when also including tax breaks for truck drivers.
Italy on Wednesday renewed until September 25 an excise duty cut on diesel, which would otherwise expire on Thursday, while reducing it to 12.2 euro cents per litre from the current 17 cents.
The subsidy will fall to around 6 cents between September 26 and October 5.
International Response
Both the European Commission and the IMF said Italy should have applied more targeted measures to shield the most vulnerable households and firms, limiting the impact on its budget.
($1 = 0.8669 euros)
(Editing by Gavin Jones and Keith Weir)
