A man fills up his car with fuel at a gas station in Seoul (Yonhap)
SEOUL, June 17 (Korea Bizwire) – The government will extend the tax cut on fuel for automobiles by an additional two months but lower the cap for the reduction in consideration of global oil prices, inflation and the dwindling tax revenue, the finance ministry said Monday.
South Korea has applied a 25 percent discount on the consumption of gasoline and a 37 percent discount for diesel and liquefied petroleum gas butane, and the scheme was supposed to expire at the end of June.
But the government decided to provide tax cuts by end-August after adjusting the reduction rate for gasoline to 20 percent and that for diesel and LPG butane to 30 percent, according to the Ministry of Economy and Finance.
The government began implementing a fuel tax cut scheme in 2021 and has extended it eight times so far, with the reduction rate having been adjusted in accordance with global energy prices.
“Most nations that temporarily introduced such fuel tax cuts in 2022 over soaring global oil prices ended the scheme in March,” Finance Minister Choi Sang-mok told reporters, noting that the Organization for Economic Cooperation and Development has recommended that South Korea terminate the measure in phases.
“Whether to extend the measure further will be decided later by factoring in global circumstances, inflation, consumer sentiment and other related factors,” he added.
Dubai crude, the country’s benchmark, had been on a rise to reach this year’s peak of US$89.17 per barrel in April amid the Israel-Hamas war and other geopolitical uncertainties but has fallen to $84.04 in May and further to $80.66 in June.
South Korea depends on imports for most of its energy needs, and rising global oil prices have caused inflationary pressure to flare up in the country.
The planned decision came as the country’s tax revenue went down more than 6 percent on-year during the first four months of this year due mainly to the fall in corporate taxes collected and income taxes amid weak corporate performances.
Recently, inflationary pressure has somewhat eased.
Consumer prices, a key gauge of inflation, stayed below 3 percent for the second consecutive month in May to stand at 2.7 percent though prices of farm produce and petroleum products remained high, according to the data from Statistics Korea.
(Yonhap)
