Korea to combat rising fuel costs by implementing higher tax cuts

The prices of fuel are so high anywhere in the world today. In South Korea, it will try to fight the rising costs by expanding the tax cuts on fuel for up to the maximum cap of 37%.

On Sunday, June 19, the South Korean government announced that it would slash the fuel tax by the mentioned maximum legal cap, and this showed an increase from the current 30%. The officials are doing this to deal more effectively with the rising inflationary pressure that has been made worse by the excessive rise in global energy and prices of commodities.

According to The Korea Times, the plan for the expanded tax cuts was revealed during an emergency meeting of the Korean government ministers leading the economy-related sectors. The new fuel tax cuts are set to take effect on July 1 and will be in place until December of this year.

With the decision, the KRW574 per liter fuel price will now be cheaper by 57 won per liter. The slash comes as the gasoline and diesel prices continue to go up even after the government already raised the previous tax cut to 30%, which was up from the 20% on May 1.

Based on the information posted on the state-run oil price website, the average price of gasoline has gone up for six consecutive weeks and only dropped a bit in the first week of May and was sold at KRW2,080.9 or about $1.61 per liter last week. Apparently, the prices of gasoline have been setting new highs every day even after reaching the highest level in over 10 years this month.

The average price of diesel shot up for six straight weeks to reach KRW2,082.7 per liter last week. This has already surpassed the high price levels after the series of increases in recent weeks.

Korea Joongang Daily reported that it was Choo Kyung Ho, Minister of Economy and Finance, who announced the emergency support measure for the inflation during a joint briefing of officials at the Government Complex Seoul.

“The government will talk with oil companies so the fuel tax cut can be quickly reflected in actual fuel costs,” Choo said at that time. “We will encourage gas stations directly operated by oil refiners to immediately lower fuel costs when the tax cut is implemented and those not directly run by the companies to lower costs within two weeks.”