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€300M Relief Package Unveiled: Fuel, Fertiliser, and Ferry Subsidies Roll Out

Diesel prices drop by 20 cents, farmers get 15% off fertiliser, and ferry fares stay low. Who benefits most from this €300M lifeline?

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2 min read
The image shows a graph of the monthly on-highway diesel price in the United States. The graph is...
The image shows a graph of the monthly on-highway diesel price in the United States. The graph is composed of two lines, one in blue and one in green, that represent the price of diesel over a period of time. The text on the graph reads "On-Highway Diesel Price" and there is a logo in the bottom right corner.

€300M Relief Package Unveiled: Fuel, Fertiliser, and Ferry Subsidies Roll Out

The government announced on Monday a reduction in the price of diesel greater than a possible reduction in the Special Consumption Tax (SCT) to the minimum permissible limits, according to market estimates.

But the impact of the measures on gasoline prices is assessed to be limited, with the market expecting the EU to give the member-states the scope for fiscal relaxation to proceed with more effective measures.

The four extraordinary measures announced by the prime minister and then specified by Finance Minister Kyriakos Pierrakakis total €300 million and concern April and May.

First, the state will subsidize diesel in the distribution network with 16 cents/liter so that the final reduction for consumers and professionals together with VAT reaches approximately 20 cents/liter. The goal, as the prime minister emphasized, is to limit the impact of the global rise in oil prices on the supply chain.

The measure is welcomed by the fuel market, acknowledging that it 'has a greater effect than a potential reduction in the VAT if we take into account that it is at €410/kilometer with a minimum limit allowed by the EU of €330/km.'

Fuel Pass, the measure from the 2022 toolbox, will return, with increased income limits and broader coverage of beneficiaries, but also with more extensive use and energy-saving features. The subsidy is calculated on average at 36 cents/liter with an average consumption of 70 liters per month and will be given via a digital fuel card, which can be used in addition to gas stations, in public transport and in taxis. In total, the support amounts to €50 per two months on the mainland and €60 on the islands.

The third measure supports the primary sector, with a 15% subsidy on the value of fertilizer purchase documents for April and May.

The last one is the intervention in ferry transport, by compensating companies for the mandatory discounts they already provide to categories of passengers. In this way the government is trying to contain the anticipated fare hikes. The fiscal cost is estimated at €56 million on an annual basis.

Partly financing the measures, new tax rates are established for online casino profits, for extra revenue of €100 million annually.

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