Italy to introduce EV subsidy and plans to tax petrol and diesel vehicles

10 December 2018

Italy to introduce EV subsidy and plans to tax petrol and diesel vehicles

10 December 2018

Italy’s governing parties are disagreeing over an amendment to the country’s 2019 budget that would increase taxes on combustion engines while subsidising low-emission vehicles.

The country’s Lower House Budget Committee approved an amendment to the 2019 budget earlier this month. The amendment would introduce a €6,000 bonus for drivers who buy a new hybrid, electric or methane gas-powered car from 1 January 2019.

The budget would also include a tax surcharge of up to €3,000 on the sale of petrol and diesel vehicles, depending on the level of carbon emissions produced.

‘It will become more and more attractive to buy less polluting cars,’ said Infrastructure Undersecretary Michele Dell'Orco and Industry Undersecretary Davide Crippa in a statement.

While the Five Star Movement supports this solution, its coalition partners from the Lega are against the planned tax increase. The Lower House is currently discussing ‘changes to the amendment’, which will be discussed again with consumer associations, trade unions and car manufacturers. The 2019 budget should be passed before the end of the year.

However, the country’s vehicle manufacturer representative body, UNRAE, have highlighted their disappointment over the lack of consultation with the industry, especially in the taxation increase on petrol and diesel vehicles.

‘It is regrettable that the Government has not decided to open a short but pro-active discussion with the operators of the sector because it would have been possible to deepen many details related to the market and consumer behaviour and, therefore, better refine the approved proposal: at present, for example, from an applicative point of view,’ the organisation said. ‘It is not clear which type of homologation procedures are to be calculated for CO2 values, considering the different existing standards (NEDC, related NEDC, WLTP) and the developments they will have in 2019.

‘We consider it unacceptable to hit Italian drivers so hard with a new tax on the latest generation vehicles. More than half of the registered vehicles will be harassed by a new tax: on some of these, the cost of taxation will be around 10% of the cost of the vehicle.’

Sales of electric, hybrid and methane gas vehicles accounted for 7% of Italian car sales in November, according to data from UNRAE. However, the country’s government has a new transport strategy plan, in which it aims to overtake Norway and become Europe’s leading market for electric vehicles.

To achieve its plan, Italy will need to challenge the perceptions of the technology in the country, something the new subsidy is aiming to do. The country’s coalition partner, the Five Star Movement, unveiled plans to put one million electrified vehicles on the country’s roads by 2022 as part of the party’s campaign before elections in March.