By Giuseppe Fonte and Angelo Amante
ROME, Sept 16 (Reuters) – Italy is abolishing road tax for 14.5 million cars and motor-bikes, Prime Minister Giorgia Meloni said on Wednesday, in a move estimated to cost the country’s strained state coffers more than €2 billion ($2.31 billion).
The decision comes as the government seeks ways to boost support ahead of a national election next year.
Meloni’s conservative coalition is trailing the centre-left in the polls and faces pressure from National Future, a new far-right party led by Roberto Vannacci which is steadily gaining support.
“Today, the government is eliminating one of the taxes most hated by Italians,” Meloni said in a statement released by her office.
The benefit will apply to all motor-bikes and more than 70% of small- and medium-sized cars, but citizens will be entitled to use it for just one vehicle each, the cabinet office said in a statement.
A draft decree seen by Reuters ahead of the cabinet meeting showed the exemption would apply for just one year between January 1 and December 31, 2027, at a cost of €2.36 billion.
It was not immediately clear where Meloni would find the money to cover the initiative.
Under its most recent budget plan, due to be updated in the next few weeks, Italy sees its public debt peaking at almost 139% of gross domestic product (GDP) this year, replacing Greece as the euro zone’s most indebted country.
Coalition parties welcomed the measure as part of the government’s tax-cutting agenda, while critics dismissed it as a bid to divert attention from rising fuel prices.
“It’s like treating pneumonia with a throat lozenge,” said Rossano Sasso, a senior aide to Vannacci.
Fuel prices across Italy have been rising for months as a result of the U.S. war against Iran that is disrupting supplies across the world, forcing the government to spend €2.8 so far to fund excise duty cuts.
($1 = 0.8669 euros)
(Reporting by Giuseppe Fonte and Angelo Amante, editing by Gavin Jones)
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