Italy is considering raising taxes on energy companies to help finance tax cuts and increased spending outlined in the government’s budget plans for 2027-29. Sources familiar with the discussions said the proposal may include an increase in the IRAP corporate tax applied to firms involved in the production, distribution, and supply of energy products.

The potential tax hike comes amid rising energy prices and higher borrowing costs, which have complicated efforts by Prime Minister Giorgia Meloni to finalize the government’s fiscal blueprint. This budget, expected to be presented next week, will be the last before Italy’s national elections scheduled for the following year.

Officials see the increased taxation on the energy sector as a way to raise revenue to support the government’s broader economic agenda, including planned tax reductions for other sectors and expanded public spending. The government faces a delicate balancing act in managing inflationary pressures and economic growth while meeting its fiscal commitments.

No formal decisions have been announced, and details of the tax proposals may still be adjusted as negotiations within the government continue ahead of the budget presentation.