The Korea Herald


Gov't considers extending fuel tax cuts amid surging prices, high inflation

By Yonhap

Published : Aug. 15, 2023 - 20:18

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The price of gasoline and diesel is seen at a gas station in Seoul, Tuesday. (Yonhap) The price of gasoline and diesel is seen at a gas station in Seoul, Tuesday. (Yonhap)

The government is considering extending a tax cut scheme on fuel consumption, which is set to expire this month, through December, sources said Tuesday, amid soaring energy costs and high inflation.

According to the sources, the Ministry of Economy and Finance has been mulling extending the measure and plans to announce its decision later this week.

Currently, a 25 percent discount is provided for the consumption of gasoline, and a 37 percent discount is given for the consumption of diesel and liquefied petroleum gas butane.

The finance ministry is said to be considering extending the tax cut for gasoline until the end of this year and gradually reducing tax benefits for diesel and liquefied petroleum gas butane.

The consideration comes amid soaring energy prices and high inflationary pressure.

As of Thursday, Dubai crude oil price shot up to $89 per barrel, up $10 from the average price of $77.20 last December, when the current tax cut rate was determined.

Inflation also remains sticky, with core inflation, which excludes volatile food and energy prices, rising 3.3 percent on-year in July, though overall consumer price growth slowed to 2.3 percent.

But the loss of tax revenue may discourage the government from extending the fuel tax cuts as the government raised a total tax income of 178.5 trillion won ($133.4 billion) in the first half, down 39.7 trillion won compared with the corresponding figure for last year.

"We plan to decide whether to extend the measure following comprehensive consideration of international energy price trends, oil prices at domestic gas stations and the consumer price situation," a government official said. (Yonhap)