The 17 euro cent per liter discount on diesel tax will be in effect in Italy until August 26. Economy Minister Giancarlo Giorgetti signed the ministerial decree together with Environment Minister Gilberto Pichetto Fratin. The text activates the mechanism of sliding scale rates, which takes advantage of extra VAT revenue, and extends the discount already foreseen in the government's last decree-law for two days, August 25 and 26, instead of a single day as initially announced, according to the newspaper Il Sole 24 Ore.
The mechanism of sliding scale rates allows the Italian government to reduce fuel tax when price increases generate additional VAT revenue. In practice, some of this extra money is passed back to the consumer at the pump. The decision rests with the Ministry of Economy, in agreement with the Ministry of the Environment, and depends on a decree signed by both ministries.
VAT is the Italian value-added tax, levied on the final price of fuel. Since it is applied to a value that already includes the specific tax, the price increase at the pumps automatically increases state revenue, which allows for a temporary cut.
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Read the original article in Italian in the newspaper. Il Sole 24 Ore .
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