Italy extends diesel tax cut as Premier Meloni faces pressure over fuel costs

Italy's government on Wednesday extended a reduction in diesel excise duties until Sept. 5, prolonging a measure aimed at shielding households and businesses from higher fuel costs linked to rising oil prices.

The latest extension will cost an estimated 130 million euros in lost revenue, according to Italian media.

Prime Minister Giorgia Meloni's government has repeatedly rolled over fuel tax cuts since the outbreak of the US-Iran conflict in February, which has contributed to higher crude oil prices.

The relief now applies only to diesel, with a reduction of about 17 euro cents per liter remaining in place through Sept. 5.

The extension comes as rising fuel prices have become a growing concern for consumers and businesses, particularly trucking companies and farmers that rely heavily on diesel. Higher energy costs have added to pressure on Meloni's right-wing government as it seeks to protect purchasing power and support economic growth.

The issue also carries political weight ahead of parliamentary elections next year. Opposition parties have accused the government of failing to tackle the broader cost-of-living squeeze, while business groups have warned that persistently high fuel prices could undermine competitiveness.

Meloni's office said earlier this week that when the current excise duty cuts expire, the government may move toward more targeted support aimed at lower-income households rather than broad-based tax relief.

The Italian Confederation of Craft Trades and Small- and Medium-Sized Enterprises (CNA) on Monday estimated that the Iran war could cost Italy nearly €12 billion ($13.9 billion).

The CNA is said to have estimated the additional expenditure on fuel, electricity and gas between March 1 and Aug. 31 at around €11.6 billion ($13.5 billion), compared with levels before the start of the Iran war on Feb. 28.

The additional costs weigh on households and businesses, with more than half attributable to mobility.

The CNA estimated the additional cost of gasoline and diesel at around €5.8 billion over the six-month period.