Spain and Italy announce emergency measures to limit the impact of rising energy prices caused by the war in the Middle East. Madrid is preparing massive tax cuts, including VAT on fuels, while Rome has already adopted a decree-law that reduces fuel prices by 25 cents per liter.
Spain cuts VAT and excise taxes to reduce pump price
The Spanish government is set to reduce fuel VAT from 21% to 10%, according to the SER radio station, citing sources close to the plans. At the same time, authorities intend to suspend excise duties on hydrocarbons, a measure that would lead to an immediate decrease in gasoline and diesel prices by approximately 0.30–0.40 euros per liter, as reported by Reuters.
Additionally, Madrid is expected to eliminate the 5% tax on electricity consumption. Government officials have not yet commented on the measures, which are expected to be announced in a conference scheduled for Friday.
Spanish ministers have previously stated that support schemes will also be introduced for the sectors most affected by the crisis. However, authorities emphasize that Spain's reduced dependence on oil, due to the high share of renewable energy, makes the Spanish economy more resilient to the current shock.
Italy directly reduces fuel price by 0.25 euro per liter
Italy has gone even further and adopted a decree-law to reduce the price of fuel by approximately 0.25 euros per liter. Prime Minister Giorgia Meloni announced that the measure applies to all consumers and aims to limit the effects of price increases caused by the conflict.
Deputy Prime Minister Matteo Salvini explained that the reduction comes from a decrease in excise duties and represents a "substantial, obviously temporary" aid. He argued that, following this decision, Italians could end up paying less for fuel than in other major European economies.
Measures for carriers and anti-speculation mechanism
In addition to the direct price reductions, the Italian government is introducing a tax credit for carriers and fishermen, aimed at compensating for the increased fuel costs and avoiding their transfer to consumer goods prices.
The decree also includes an anti-speculation mechanism, which requires oil companies and distributors to adjust prices based on the actual evolution of international oil quotations.
Giorgia Meloni stated that this system will allow for the "immediate cessation of unjustified price increases" and will ensure that any reductions in oil prices are quickly reflected at the pump.
Oil up almost 50% after blocking the Strait of Hormuz
The rise in fuel prices is fueled by the rapid increase in oil prices, which have risen by almost 50% since the beginning of the attacks launched by the US and Israel against Iran on February 28.
The blockade of the Strait of Hormuz - a strategic point through which approximately one-fifth of the world's oil and liquefied natural gas transit - has heightened concerns about supply and led to a wave of price hikes in Europe.
Chain reaction in Europe: Serbia and Germany prepare measures
The energy crisis triggers chain reactions in Europe. Serbia has already announced a 20% reduction in fuel excise taxes, while Germany is preparing a bill to strengthen price control.
Berlin's plan could compel oil companies suspected of abuses to demonstrate that they have adhered to market rules in setting tariffs.