Italy extends diesel tax cut to August 25 as pump prices stay above €2 per litre
The Council of Ministers approved a €245 million extension of the 17-cent-per-litre diesel excise reduction, financed by ministry budget cuts and extra VAT revenue. Gasoline remains untouched, with self-service prices at €1.999.
Extension decision
The Council of Ministers on 4 August approved a 19-day extension of the diesel excise cut, keeping the reduction at 17 cents per litre (including VAT) until 25 August. The cut had been due to expire on 6 August. Prime Minister Giorgia Meloni met with deputy premiers Antonio Tajani and Matteo Salvini and economy minister Giancarlo Giorgetti before the cabinet meeting to finalise the measure.
- Council of Ministers approves 17-cent diesel excise cut
- Reduced rate takes effect at midnight
- Diesel self-service price drops to €2.074
- Diesel falls further to €2.066
- Cabinet extends cut to 25 August; diesel at €2.100
- Original expiry date of the cut
- New expiry; mobile excise mechanism reactivates
Cost and financing
The extension will cost €245 million, Giorgetti said. Funding comes from two sources: the so-called mobile excise mechanism, which uses extra VAT revenue generated by higher fuel prices to offset the excise reduction, and cuts to ministry budgets.
We cut some spending from the ministries; they weren't very happy, but we'll see.
University minister Anna Maria Bernini confirmed each ministry contributed "pro quota". The mobile excise, originally devised by the Prodi government in 2008 and reformed by Meloni in 2023, is self-financing but reduces overall tax intake.
Pump prices
Despite the cut, diesel self-service averaged €2.100 per litre on 4 August, up from €2.097 the previous day, according to the Mimit price observatory. On motorways, diesel reached €2.173. Gasoline, which receives no excise reduction, held at €1.999 self-service and €2.084 on motorways. The consumer group Codacons noted that gasoline exceeded €2 per litre in 10 regions, with Bolzano the most expensive at €2.031.
The excise cut continues to be eaten away by speculation.
The association called the government's failure to intervene on gasoline a penalty for over 17 million motorists.
- Diesel self
- 2.1 €/litre
- Diesel highway
- 2.173 €/litre
- Gasoline self
- 1.999 €/litre
- Gasoline highway
- 2.084 €/litre
Political tensions
The decision followed internal friction. Salvini rejected financing the cut through higher taxes on cigarettes or alcohol.
Lowering diesel by 20 cents to tax cigarettes and alcohol doesn't seem to go anywhere. I give with the right hand and take with the left.
He instead urged taxing large banks' profits. Giorgetti reportedly pushed for more targeted aid to businesses and struggling families rather than a broad cut, but Meloni opted to extend the diesel-only reduction to cover the summer holiday exodus.
What happens after 25 August
Meloni wrote on Facebook that from 25 August the mobile excise mechanism will reactivate, and the government will "continue to monitor carefully to assess any further intervention." The government has spent over €2 billion since March to cushion fuel prices, driven by the Iran conflict and the Strait of Hormuz blockade, and has little fiscal room for further broad subsidies.
AI decree
The same cabinet meeting gave final approval to a legislative decree adapting national law to EU rules on artificial intelligence. The decree introduces AI into school curricula, establishes territorial technical-ethical committees, and allocates €100 million for permanent teacher training to prevent digital addiction and social media abuse. AI training will also be extended to adult professional retraining and higher education.
