Italy will abolish the annual road tax for approximately 14.5 million cars and motorcycles, Prime Minister Giorgia Meloni announced on Wednesday. The measure is expected to reduce government revenue by over €2 billion ($2.31 billion) and is part of the administration’s broader efforts to garner public support ahead of next year’s national elections.

Under the new policy, the tax exemption will cover motorbikes as well as about 70% of small and medium-sized passenger vehicles, which represent a significant portion of the country’s vehicle fleet. Meloni characterized the move as the elimination of one of the most unpopular taxes among Italian citizens.

The government did not provide a detailed breakdown of how the policy will be financed, but analysts note that the suspended tax revenue could place additional pressure on Italy’s already strained budget. Critics argue that while the tax cut may offer relief to drivers, it risks widening the fiscal deficit at a time when public finances remain fragile.

Supporters maintain that reducing the tax burden on motorists will stimulate economic activity and provide tangible benefits to many households across Italy. The decision follows a broader trend among European governments seeking measures to ease cost-of-living pressures amid inflationary challenges.

The abolition of the road tax marks a significant shift in Italy’s taxation policy on motor vehicles, reflecting the government’s intent to address public grievances and broaden its political base in advance of the upcoming electoral contest. Further details regarding implementation and potential compensatory fiscal measures are expected in the coming weeks.