Extra subsidy from the additional tax revenue of gasoline

The government may rule out a 24% reduction in Excise Tax and VAT on motor fuels (petrol and diesel), but will return the additional revenue to economically vulnerable groups.

According to information available to OT, this allowance will be the additional aid announced last week by Prime Minister Kyriakos Mitsotakis and will probably be given to low-wage earners and retirees in order to deal with the effects of energy inflation.

OT sources report that today, Monday and tomorrow, Tuesday, the PM’s office and the government’s financial staff will lock the overall package of measures to support households and businesses that will be announced by Kyriakos Mitsotakis within the week. They provide for the creation of a mechanism that will return to households the additional revenues of VAT and special excise taxes resulting from the rally of price increases in gasoline and diesel. Only in the period of February 23 (one day before the Russian invasion of Ukraine) until today, the VAT revenues have increased by 37%, executives of the oil market tell OT. It is characteristic that the average price of unleaded gasoline jumped from 1,887 euros / liter to 2,082 euros / liter, an increase of 0.19 euros / liter. For diesel, in the same period mentioned above, prices jumped from 1,623 euros / liter to 1,936, an increase of 0.31 euros / liter.

The operation of the mechanism

This mechanism, as noted by competent officials, will operate in the standards of the equivalent of granting the allowance to electricity bills. The difference will be that the aid will not be given on such a broad social basis, but probably to citizens who meet the income and property criteria of the heating allowance.

The mechanism will monitor the evolution of liquid fuel prices and the collection of revenues from their indirect taxes and based on specific limits that will be established will return the surplus to low-income households. It will be maintained, the information says, as long as the energy crisis and the effects of the war in Ukraine last.

De-escalation of prices

Regarding the course of the prices of diesel fuel, factors of the petroleum market report to the OT that from today the large de-escalation of the crude oil is expected to be reflected in the pumps as well.

Oil fell from $ 135 a barrel to $ 110 a barrel, and according to the same sources, it is not excluded from today and in the coming days the average price of unleaded gasoline from 2.10 euros / liter may fall to 1.90 euros / liter.

However, oil trading companies talk about high volatility in crude oil prices, which is expected to remain in the near future, that is, as long as the armed conflict in Ukraine lasts and as long as the issue of the embargo on Russian oil remains.