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Back|Car tax, for poor families the discount is worth almost triple
Car tax, for poor families the discount is worth almost triple
NEWS
Il Sole 24 Ore·58 minutes ago·Business·2 min read·🇮🇹Italy·

Car tax, for poor families the discount is worth almost triple

The Parliamentary Budget Office analyzes the effect of fiscal policies: the cut in excise duties favors high incomes, the exemption from car tax supports less wealthy families.

Quick Look

  • The Parliamentary Budget Office compares the redistributive impact of the excise duty cut and the exemption from car tax.
  • While excise taxes benefit high incomes, the exemption from car tax has a progressive effect, helping low-income families more.

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Why It Matters

The Parliamentary Budget Office has published Focus 5/2026 analyzing the regressive impact of excise duties and the progressive impact of exemption from car tax.

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In the derby of measures against high fuel prices, the cut in excise duties helps the richest families more, while the exemption from car tax helps the poorest. In general, the contrast is known: but translated into figures it becomes much more significant.

The numbers that measure the redistributive distance between the two interventions are offered by the Parliamentary Budget Office. Four years ago, the Audit Authority was the first to detail the regressive impact of generalized discounts on excise duties. And today, with the Focus 5/2026, it has done the same work on car tax. With opposite results.

The numbers, then, in summary. The cancellation of the tax from the first car with a power of up to 80Kw, or from the motorbike of those who do not own an exempt car, reduces the expenditure of the typical family by 0.36%. But the typical family does not exist. There are real families, very different from each other in economic conditions and therefore in spending capacity. Which obtain different effects from the discount on the road tax.

For those in the first decile, i.e. the 10% of families characterized by a smaller budget, the farewell to car tax reduces overall spending by 0.9%, with an impact which is therefore equal to 2.5 times the average, measured across everyone. The weight of the measure on the total annual expenditure then progressively decreases to 0.7% in the second decile, to 0.6% in the third down to 0.1% in the last decile, where the most bloated portfolios are concentrated.

This happens because in absolute value the benefit produced by the exemption is almost linear in the different economic brackets, since it spreads across the board, involving 63% of families. But the average 168.4 euros calculated by the Government in the technical report to legislative decree 162/2026 (59 for motorbikes) obviously have a greater specific weight when the family budget is smaller.

The distribution geography of the excise duty cut is mirrored, because the benefit remains substantially stable in its relationship with overall spending, oscillating between 0.2% and 0.3% in the various deciles, while it changes in absolute value, growing together with the economic fortune of those directly involved. The reason is in the structure of the two levies: the excise duties are linked to consumption, on average higher in richer families, who generally have more powerful cars, while the tax is unrelated to the kilometers traveled (it is also paid by those who regularly keep the car parked), and also has an uncertain dialogue with the price lists (the tax grows much less progressively than the price of a new vehicle, and remains constant as the car ages and loses value).

Open Questions

  • ?What will be the future structural reforms on car taxation?

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This article was originally published by Il Sole 24 Ore.

Quick Look

  • The Parliamentary Budget Office compares the redistributive impact of the excise duty cut and the exemption from car tax.
  • While excise taxes benefit high incomes, the exemption from car tax has a progressive effect, helping low-income families more.

AI-generated summary

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Il Sole 24 Ore
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Published
58 minutes ago
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excise duties
car tax
parliamentary budget office
excise duties
Parliamentary Budget Office
Government
car tax
parliamentary budget office
fiscal policy
redistribution
families

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