November 28, 2024

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A signboard at a gas station in Seoul shows a spike in prices of gasoline and diesel, Sunday. (Yonhap)

The Korean government will extend the current tax cut imposed on fuel until the end of August, the Finance Ministry announced Tuesday.

Fuel tax reductions -- namely a 25 percent cut for gasoline, and 37 percent cuts for diesel and the liquefied petroleum gas butane -- which were to end in April, will last for another four months, considering the rising prices of oil, the ministry said.

The cut pulls down gasoline prices by cutting tax worth 205 won ($0.16) from 820 won to 615 won per liter, diesel by 212 won from 581 won to 369 won and liquefied petroleum gas butane by 73 won from 203 won to 130 won. The scheme will last until Aug. 31.

The fuel tax cuts were implemented from November 2021 following the spiking of international oil prices.

At a National Assembly meeting held Monday, Finance Minister Choo Kyung-ho hinted at the possible tax cut extension, saying that higher fuel prices could be a burden for people's livelihoods.

It was reported earlier this month that the government might end the tax reduction scheme or cut down on the size of the reductions due to falling tax revenue.

South Korea has been seeing a shortfall in tax revenue due to the slow economy. The fuel tax cuts have led to a drop in tax revenue worth 5.5 trillion won last year.

"It is true that there were discussions that the tax cuts should be dropped or reduced as global oil prices were stabilized earlier this year. But as global oil prices are on the rise again following the oil production cut decision from OPEC+, the price of gasoline has been continuing an upward trajectory," he said.

According to Opinet, a website operated by the Korea National Oil Corp., the retail price of gasoline stood at an average of 1,631.1 won in the second week of April, up 30.2 won from the week before. Without the extended tax cuts, the price of gasoline would have spiked to over 1,800 won per liter.

The Korean government will extend the current tax cut imposed on fuel until the end of August, the Finance Ministry announced Tuesday.

Fuel tax reductions -- namely a 25 percent cut for gasoline, and 37 percent cuts for diesel and the liquefied petroleum gas butane -- which were to end in April, will last for another four months, considering the rising prices of oil, the ministry said.

The cut pulls down gasoline prices by cutting tax worth 205 won ($0.16) from 820 won to 615 won per liter, diesel by 212 won from 581 won to 369 won and liquefied petroleum gas butane by 73 won from 203 won to 130 won. The scheme will last until Aug. 31.

The fuel tax cuts were implemented from November 2021 following the spiking of international oil prices.

At a National Assembly meeting held Monday, Finance Minister Choo Kyung-ho hinted at the possible tax cut extension, saying that higher fuel prices could be a burden for people's livelihoods.

It was reported earlier this month that the government might end the tax reduction scheme or cut down on the size of the reductions due to falling tax revenue.

South Korea has been seeing a shortfall in tax revenue due to the slow economy. The fuel tax cuts have led to a drop in tax revenue worth 5.5 trillion won last year.

"It is true that there were discussions that the tax cuts should be dropped or reduced as global oil prices were stabilized earlier this year. But as global oil prices are on the rise again following the oil production cut decision from OPEC+, the price of gasoline has been continuing an upward trajectory," he said.

According to Opinet, a website operated by the Korea National Oil Corp., the retail price of gasoline stood at an average of 1,631.1 won in the second week of April, up 30.2 won from the week before. Without the extended tax cuts, the price of gasoline would have spiked to over 1,800 won per liter.

By Im Eun-byel (silverstar@heraldcorp.com)