Fuel subsidy: New “firefighting” measures are coming

With the price of gasoline breaking one record after another and Hellenic Statistical Authority-ELSTAT today announcing more than 11% inflation for May, the government is preparing to announce new “firefighting” measures to scotch inflation.

The new interventions that are being considered and will be announced within the next 10 – 15 days provide for an extension of the subsidy for gasoline with an increase in the amount and number of beneficiaries of the fuel pass, extension of the subsidy for diesel fuel at the pump by adjusting its amount. There is also a proposal for the application of the subsidy model in diesel and gasoline as well as a “haircut” of the VAT rate on certain foods, but given that the cost to the public coffers is heavy, the proposal does not have much chance of implementation.

What is included in the package

– Expansion and broadening of the fuel pass. The fuel allowance will continue for at least another two months, while the beneficiary base will be widened. It is planned to increase the subsidy of 30-50 euros with emphasis on the islands and the income criterion in order for more consumers to receive the benefit. The income threshold of 30,000 euros (declared family income) is being considered to be increased to 45,000 euros net after taxes, which applies to the electricity subsidy with the budget execution data in the middle of next week locking the final options. The proposal to subsidize the price of gasoline directly at the pump has also fallen on the table, but it has a large budgetary cost. It is noted that tomorrow, Friday, the platform through which the beneficiaries can receive the fuel subsidy for the quarter April – June closes. The first round of the fuel pass showed that more than 8 out of 10 beneficiaries turned their backs on the digital petrol card and the 5 euro bonus and chose to have the 30-50 euro subsidy paid to their bank account in order to cover possible other needs besides fuel.

– Extension of the subsidy for diesel. The subsidy for diesel will be maintained after June and the amount of the state subsidy at the pump will be increased. This amount currently comes to 12 cents per liter without VAT. With VAT the subsidy reaches about 15 cents per liter. The new diesel subsidy will be greater than 15 cents per liter.

Inflation check No2

An extraordinary summer “gift” remains on the government’s table, corresponding to the 200-euro allowance given at Easter, to support the most vulnerable households. Giving a new inflation check requires a budget of about 250-300 million euros.