Seoul pushes fuel tax relief to legal bottom of 30% amid flying inflation

[Photo by Park Hyung-ki]

The South Korean government will deepen the fuel tax relief to 30 percent from 20 percent for three months from May and subsidize some of the fuel cost for commercial bus and truck drivers as the country grapples with strongest inflation and fuel prices in more than a decade.

Finance minister Hong Nam-ki announced on Tuesday that the government will extend the fuel tax cut to ease the burden on consumers. The fuel tax will be lowered from the current 20 percent to 30 percent, the maximum cut allowed by law, from May to July.

Seoul has eased the fuel tax to 20 percent from November last year to the end of April this year.

The new 30 percent fuel tax cut would bring the levy per liter of gasoline to 574 won ($0.47), off 82 won from a cut of 20 percent. For a person that drives 40km per day, the new fuel tax will save 10,000 won more compared to the 20 percent fuel tax cut.

The government projected earlier that an extension of the 20 percent fuel tax will reduce tax revenue by 1.4 trillion won. According to transition committee estimates, the tax revenue will fall by another 700 billion won from the additional cut to 30 percent.

The government will also temporarily provide oil price-related subsidies for three months to truck and taxi drivers, and small business owners.

As part of the plan to combat global inflation, the government will exempt tariffs on imports of aluminum strips which are used to produce secondary batteries and automobiles.

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