Italy has decided to scrap the vehicle tax for 14.5 million passenger cars and motorcycles, Prime Minister Giorgia Meloni announced on Wednesday, a measure expected to cost the already strained state budget more than €2 billion, Reuters and ANSA report, as noted by Agerpres.

The decision comes as the government seeks ways to boost its popularity ahead of next year’s legislative elections.

Meloni’s conservative coalition is trailing the centre-left opposition in the polls and is facing pressure from National Future (Futuro Nazionale, FN), a new far-right party led by Roberto Vannacci, which is steadily gaining ground.

“Today, the government is scrapping one of the taxes most detested by Italians,” Meloni said in a statement issued by her office, referring to the so-called “bollo auto”.

The benefit will apply to all motorcycles and to more than 70% of small and medium-sized cars – those with an output of up to 80 kW – while citizens will be able to claim the measure for only one vehicle, the prime minister’s office said in a statement.

In 2027, the exemption is expected to cost the state €2.36 billion, according to the draft seen by Reuters, which notes that it is unclear where Meloni will obtain the funds needed to finance the initiative.

Under the latest budget plan – which is due to be updated in the coming weeks – Italy estimates that its public debt will peak at nearly 139% of gross domestic product (GDP) this year, overtaking Greece and thereby becoming the most indebted country in the eurozone.

The coalition parties welcomed the measure as part of the government’s tax-cutting agenda, while critics rejected it, describing it as an attempt to divert attention from rising fuel prices.

“It is like treating pneumonia with a throat lozenge,” said Rossano Sasso, an adviser close to Vannacci.

Fuel prices in Italy have been rising for several months as a result of the conflict between the United States and Iran, which is disrupting global supplies and has so far forced the government to spend €2.8 billion to finance cuts in excise duties.

Source – AGERPRES