Among other things, France is increasing its energy levy and Italy is reducing its tax euros to help offset the cost of living. Germany is also cutting its fuel tax.
Inflation rate eases to 7.6%
Despite some one-off effects, inflation eased to 7.6% in Europe in June. The European Central Bank (ECB) has announced three rate hikes so far this year. They are expected to increase the rates again in September and October. Inflation will remain high throughout the year, however.
The ECB’s summer economic forecast reflects the results of its latest economic survey. It forecasts annual average inflation in the euro area at 7.6% in 2022. This is a full percentage point higher than the forecast in the Spring Forecast.
The European Commission’s monthly sentiment survey showed that economic sentiment in the eurozone fell to 104.0 in June from 105.0 in May. Economic sentiment in the services sector improved to the tune of 0.7 points. Inflation slowed in the industrial sector to 7.6% in June.
The ECB forecasts that the euro area will expand by 2.7% in 2022. This compares to the previous forecast’s 2.3%. Despite the high inflation rate, the number of unemployed people in the euro area is projected to drop to 6.4% in 2027.
Energy prices have stayed stable for the last four months. However, Russia’s invasion of Ukraine has rattled Europe and caused the price of oil to rise. This has increased the price of gas for consumers. Gas prices contributed 95.7% to the euro area’s annual inflation rate in the last 12 months. In addition, the price of other fuels increased by 1.84 percentage points.
In Germany, inflation slowed to 7.5% in July from 8.8% in May. However, the rate remains high, mainly due to the price of energy. In July, the price of gasoline increased by 35.6% over the previous month. Inflation also rose in the food, alcohol and tobacco category, which increased by 1%.
Germany is one of the main oil and gas importers in Europe. The country relies on Russian oil and natural gas for its energy needs. The country’s inflation rate has been higher than other EU countries, but inflation in other countries has been relatively less severe.
While the euro area inflation rate has risen to a record high, the European Commission’s forecast is less optimistic. The European Commission forecasts a rise in inflation to 8.3% in 2022. However, the ECB predicts that inflation will drop to 4.3% in 2023. The IMF’s latest forecast is for 2.6% growth in the euro area in 2022.
Germany cuts fuel tax
Chancellor Olaf Scholz’s government has passed a major tax cut on fuel in Germany. This is part of a package of measures to help households cope with the cost of living crisis. The government has also announced additional measures including a one-off payment of EUR300 for workers, pensioners and students.
The EU is also planning to help affected communities by boosting support for energy costs. The European Commission is drafting proposals including a mechanism to cap prices and a one-off payment for gas bills.
The German government is also planning a 96 billion euro ($93 billion) gas price plan. The plan is part of an effort to ease pressure on consumers and businesses by limiting the growth in gas prices. The plan will see gas prices cut to 12 cents on 80% of usage.
The plan is part of a larger plan to cut gas imports by two-thirds from Russia in a year. Scholz says the plan will ease the burden on consumers while he aims to reform the energy market.
The government has also pledged to crack down on energy providers. It has also announced an EUR100 bonus payment for low income households to help them cope with rising energy costs. The money will be paid through wages or social benefits. The money is expected to raise EUR147 million in funding for the hard-hit.
Meanwhile, Ireland has cut fuel duty by 20 cents per litre for petrol and 15 cents per litre for diesel. Belgium is also planning to cut fuel taxes. The Netherlands plans to cut energy taxes by 9%.
The German government has also introduced ultra-cheap fares on public transport to encourage people to use less. The EUR9 ticket gives unlimited travel on trams and regional transport.
The government is also planning to offer a one-off payment of EUR100 to families with children on social benefits and to workers who get state benefits. However, not everyone is happy with the tax cut. The government is accused of using the national budget to subsidize fuel.
While the German government has done the right thing by cutting fuel taxes, the government needs to be better at including the practical needs of companies in its crisis management.
France increases energy levy
Several European countries are facing a cost of living crisis and are increasing their energy levy to help their households cope. The EU budget includes support for low-income households, including a one-off payment of EUR100 per child to child allowance recipients. It also includes a 4% increase in the index point for pensions in September 2022.
The package also includes an emergency mechanism – a ‘crisis contribution’ – from energy producers and mandatory targets to cut electricity consumption during peak hours. Several individual countries have also announced support measures for consumers. In France, the government has introduced measures to freeze prices, including a cap on the price of electricity until the end of the year.
Prime Minister Elisabeth Borne has not said whether she will approve a windfall tax on energy firms. She has said she prefers alternatives. She has also ruled out raising the tax to fund a more ambitious plan.
The French government has faced widespread protest against fuel price hikes. The country’s average four-person household will pay EUR480 more a year for gas levy. Energy firms have been benefiting from higher oil and gas prices. A windfall tax is one way to fund the measures. Opponents of the tax say it would be unfair to target energy companies. They also argue that it would be difficult to apply.
The package is expected to cost around PS150 billion over the next two years. It will include an automatic levy trigger, which will provide a more predictable market environment. It will also include a cap on household energy price increases. This will limit the price rise to 15% per year.
The government has also announced measures to support business, including grants of up to EUR25mn. The new gas price cap will take effect from January. The price cap will cover households using between 2,900 and 12,000 kWh of electricity per year. It will also be limited to a maximum of 3.5% per year for renters.
French households will also get a one-off payment of PS650 if they receive means-tested benefits. The government will also increase the housing allowance for low-income households by 3.5%.
Italian government reduces tax euros to offset cost of living
During the recent G-7 and G-20 Summits, Italy shared its best practices for fighting corruption. It is also working on implementing a European Union directive on whistleblower protection. This will help to improve the economic, social and cultural rights of Italians. In addition, Italy is promoting international human rights standards to better respond to new challenges. In this context, the Italian Government has implemented a series of fiscal measures to help alleviate the cost of living crisis.
The Italian Government has also introduced support measures for businesses with Italian headquarters and enterprises that have experienced a 33% drop in revenues. In addition, a non-refundable grant has been introduced for individuals with revenues of up to EUR 5 million. This grant is paid by the Italian Revenue Agency.
In addition, the Italian Government has also introduced tax incentives for enterprises with revenues of up to EUR 50 million. This will help to alleviate the costs of business establishments. The incentives are paid to the beneficiary companies as a lump sum. The incentives are defined by a decree issued by the Italian Minister of Economic Development.
This fund also offers incentives to scrap old cars. For example, you can get a EUR 4,000 tax credit when you scrap your car. This will help to improve the environment and encourage the development of new technologies. The fund will also support the automotive industry recovery.
Tax credits can also be transferred to other entities for offsetting purposes. Tax credits can be transferred between individuals and companies, as well as to credit institutions. You can also apply for a sanitisation tax credit, which applies to expenses for personal protective equipment and workplace sanitisation. You can also apply for a tax credit for improvements to energy efficiency.
The Italian Government has also introduced tax relief for non-commercial entities. You can receive tax relief for the purchase of a holiday farm or campsite, or for artistic activities. You can also receive a tax credit for complex service agreements. You can also receive tax relief for hotels, travel agencies, and tour operators.
In addition, the Italian Government has introduced a new holiday tax credit. This credit is worth EUR 150 for one-person households and EUR 300 for family units. You can receive a holiday tax credit if you stay in a hotel, bed and breakfast, or tourist accommodation in Italy.