Energy subsidies that last, the minimum tax rate on fuels, absorb the shock to the budget.
In a week in which, like previous ones, Portugal records average prices close to 2 euros per liter, for both diesel and gasoline, we took a look at the price of fuel in Malta.
The portal shows that a liter of Gasoline costs 1,340 euros and a liter of diesel stay hairy 1,210 euros. The price of the previous week, so to speak.
But how? How is it that in Malta petrol is 24% cheaper than the European Union average and diesel is 37% (!) cheaper than in the rest of Europe?
There are several reasons. It is essentially a budgetary and fiscal strategy. Which has an obvious risk.
Subsidies
The Government of Malta has had energy subsidies for several years. He argues that he continues to fund subsidies to keep energy and fuel prices stable. It started four years ago because of the war in Ukraine and the most recent ones extend subsidies.
Taxes
The tax burden on fuel is low. In fact, Malta is the only country in the European Union to apply the European minimum rate, with just 36 cents per liter, shows the .
Absorb in the Budget
Another important fiscal decision: Malta preferred to absorb a large part of the international economic “shock” in the State Budget – and not pass it completely on to the consumer. In other words, the State compensates for part of the difference in the final price of fuel. Something that also comes from 2022, reinforced . At the time, the Maltese Government announced that it would allocate 10% of its current expenditure to maintain the freeze on energy and fuel prices.
The problem is visible in this system: these are policies that cost public money. In 2023, the IMF left the issue of fiscal sustainability, suggesting a reduction in energy subsidies.
Nuno Teixeira da Silva, ZAP //
