SEOUL, April 18 (Korea Bizwire) — South Korea plans to extend the consumption tax cut scheme on fuel, which is set to expire this month, through August, the finance ministry said Tuesday, despite concerns the government’s tax revenue may miss target amid an economic slowdown.
Under the measure, a 25 percent discount on the consumption of gasoline, and a 37 percent discount on the consumption of diesel and liquefied petroleum gas butane will remain in place until August, according to the Ministry of Economy and Finance.
“Despite the recent difficult financial conditions, the measure puts its top priority on easing the burden of the people,” the ministry said in a statement, pointing out local oil prices have been rising since the announcement of OPEC Plus’s plan to cut production.
Earlier this month, Finance Minister Choo Kyung-ho saidSouth Korea’s tax revenue may fall below an earlier estimate this year amid an economic slowdown.
The finance ministry said the tax revenue fell 15.7 trillion won (US$11.9 billion) in the first two months of 2023 on-year over the slump in the real estate and the securities markets.
The updated measure will be implemented on May 1 after being approved by the Cabinet later this month.
Meanwhile, South Korea’s consumer prices, a key gauge of inflation, rose 4.2 percent last month from a year earlier, slowing from the rise of 4.8 percent tallied in February, according to the report from Statistics Korea.
But inflation stayed above 2 percent — the central bank’s inflation target over the medium term — for the 24th straight month in March.
The prices of utility services went up 28.4 percent on-year in March amid the prolonged war between Russia and Ukraine, which led to jitters in the global energy supply.