In an amendment made to the 2020 budget bill on Thursday, the government halved its planned tariff on plastics and excluded products that contain recycled and biodegradable plastic.
The tax has now been set at 50 cents per kilogram of plastic product instead of €1.
The law will also now exclude all medical devices and containers, not just syringes, as was written in the first draft.
The amendment means expected revenue from the plastic tax will drop from €1.1 billion to around €300 million.
However, seeking to maintain a focus on the environment and appeal to the female vote, the government announced a steep cut in sales tax on biodegradable tampons.
“Value-added tax on compostable and biodegradable tampons will be reduced to 5 per cent from 22 per cent,” economy minister Roberto Gualtieri said on Twitter late on Thursday.
Leftist female lawmakers had led a campaign to slash the so-called #tampontax, recently a popular Twitter hashtag in Italy.
“This is a sign of civilisation, with a green vision,” Five Star Movement (M5S) deputy economy minister Laura Castelli said.
The proposed policies, which are set to come into effect in January, are yet to be approved in parliament.
While the planned plastic and sugar taxes were initially praised, both of these proposals have since been softened considerably after protests from producers and businesses.
Politicians behind the bill, most notably members of the M5S, said the plastic tax is an environmental policy.
But the plastic industry claims the tax has “no environmental purpose” and that “it only serves to ‘make cash’ and will only damage the environment, innovation, industry and workers”.
Trade association Plastics Europe said in a press release that “Italy is the second biggest producer of plastics products after Germany”, and claimed the “regressive tax” would put 50,000 jobs at risk in Italy.
The plan got a particularly hostile reception in the northern region of Emilia Romagna, which is set to hold an election on January 26.
Plastic packaging is a major source of income and employment in Emilia Romagna, one of Italy’s most industrialised regions.