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Thursday, September 28, 2023

Italy approves $5.4 billion package to soften energy costs

Italy approves .4 billion package to soften energy costs
© Reuters. FILE PHOTO: A general view of the Prime Minister’s office Chigi Palace on the day Mario Draghi is expected to address the Parliament after he tendered his resignation last week in the wake of a mutiny by a coalition partner, in Rome, Italy July 20, 2022.

By Giuseppe Fonte

ROME (Reuters) -Italy said on Tuesday it had approved a new set of measures worth almost 5 billion euros ($5.41 billion) to cut costly energy bills paid by families and firms.

Rome earmarked over 21 billion euros in its 2023 budget to soften the impact of energy costs on the euro zone’s third-largest economy in the first quarter of this year.

Prime Minister Giorgia Meloni’s administration extended and reviewed these measures using part of the funding initially set aside, but not yet spent because energy prices have dropped.

The benchmark gas contract on the Dutch TTF hub hovers around 42 euros per megawatt hour (MWh) at present, sharply down from 73 euros in early 2023.

As part of the broader package, the Italian government prolonged until June an existing bonus aimed at cutting energy bills paid by low-income households, the Treasury said in a statement.

A reduction in sales tax for gas supplies to 5% from the current rates of 10% and 22% will also be in place for an additional three months.

Separate tax bonuses will help firms whose spending for electricity and gas supplies in the first quarter of 2023 increased by more than 30% compared with the same period in the year 2019.

A flat-flee bonus to compensate heating costs for families will take effect from October until December.

Moreover, Rome intends to soften a windfall tax weighing on energy companies that have benefited last year from oil and gas prices, a draft of the scheme seen by Reuters showed.

The right-wing administration plans to apply a 50% one-off levy on the part of 2022 corporate income which is at least 10% higher than the average income reported between 2018 and 2021.

Italy said last November it expected to raise around 2.565 billion euros from the scheme, but now the Treasury wants to exclude part of the companies’ reserves from the 2022 income which is needed to estimate the tax due, according to the draft.

($1 = 0.9235 euros)

Source: Investing.com

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