MILAN (Reuters) – Italy will offer subsidies of up to 6,000 euros (£5,391.3) to buyers of new low emission vehicles while slapping taxes on the purchase of larger petrol and diesel cars, according to measures approved in parliament.
The measures, contained in Italy’s 2019 budget passed by the upper house on Sunday, made changes to rules proposed by Rome earlier this month which drew criticism from the car industry.
Unions and auto sector associations have warned about the proposed new tax, saying it could hurt not only carmakers but also the entire supply chain and could cost jobs.
Italy’s ruling parties – the anti-establishment 5-Star Movement and the right-wing League – have been at odds over the issue, with the latter opposing any new taxes on cars, while the pro-environment 5-Star has encouraged the new rules.
In their new form, the taxes proposed for cars running on traditional fuels will no longer apply to small family cars but only to larger high-powered vehicles, including SUVs.
A tax of 1,100 euros will be slapped on new petrol and diesel cars that generate 161-175 grams of CO2 emissions per kilometre. That will rise to 1,600 euros for emissions of 176-200 and to 2,000 euros for emissions of 201-250.
Incentives for electric and hybrid vehicles, meanwhile, will vary according to emissions generated and will not apply to models that cost more than 50,000 euros ($57,000).
The new measures, which still need to be approved in the lower house, will come into effect on March 1 and last to the end of 2021.
Electric, hybrid and methane gas-powered cars currently make up only around 7 percent of Italy’s car sales.
Italy’s Fiat Chrysler <FCHA.MI>, which at present sells no electric or hybrid cars in Europe, said in November it was planning to spend more than 5 billion euros on new models and engines in Italy between 2019-2021.
In December, in reaction to the original measures, Fiat said it could review its Italian investment plan if Rome raised taxes on petrol and diesel cars. Fiat has not commented since changes to the original proposals were made.
Italy’s 2019 budget is expected to be approved by the lower house of parliament this week.
(Reporting by Stephen Jewkes; Editing by Alison Williams)