Italy cuts fuel taxes to curb inflation

Lower prices welcomed by employers, but environmental groups attack move as "anti-ecological"

Italian retail petrol and diesel prices fell by an average of IL30 (euros 0.015) per litre on Monday following a government decree intended to restrain inflation. The move was welcomed by employers and unions but attacked by environmental groups. Italian fuel prices rose by a similar amount earlier this year when a carbon tax was introduced, affecting all fossil fuels (ENDS Daily 19 January). The new reduction is intended to remain in force only until the end of this year or early next, and follows preliminary figures showing Italy's annual inflation rate to be in danger of breaching the upper limit allowed under the Maastricht stability pact. The government estimates that lower prices for road and heating fuels this year will cut the overall rate of inflation by 0.02%. Responding to the news, environment minister Edo Ronchi described the decree as "the lesser of evils" but warned that the tax cut "is only tolerable as a temporary measure". The minister wants to see the reductions extended to lower emission fuels such as liquefied petroleum gas, financial daily Sole 24 Ore reported yesterday. Meanwhile, the move has been strongly criticised by environmental NGO Legambiente. The group said that, if inflation had to be reduced, the government should have cut prices for telephone communications rather than petrol. "A litre of milk costs 15% more today than in 1970 while a litre of petrol costs 17% less," the group added in a statement.

Follow Up:
Italian prime minister's office, tel: +39 06 67791; Legambiente, tel: +39 06 86 26 81.

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