(2nd LD) S. Korea to expand fuel tax cuts amid soaring energy prices


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SEJONG, April 5 (Yonhap) — South Korea to expand fuel consumption tax cuts as part of efforts to ease inflationary pressure that has built up amid soaring prices energy, the country’s top economic policy official said on Tuesday.

The government will extend fuel tax cuts of 20% to 30% from early May to the end of July, as the Russian-Ukrainian war has pushed up the prices of crude oil and other raw materials even further, it said. Finance Minister Hong Nam-ki at an anti-inflation conference. Meet.

The decision came as consumer prices in South Korea rose 4.1% in March from a year earlier, marking the fastest price growth in more than 10 years. In particular, the prices of oil-related products jumped 31.2% during the cited period.

“At a time when inflationary pressure is feared to persist for the time being, the issue of inflation is more important and more serious than any other outstanding issue,” Hong said.

South Korea is grappling with growing inflationary pressure from global supply chain disruptions and soaring oil and commodity prices caused by Russia’s invasion of Ukraine.

The price of Dubai crude, South Korea’s benchmark, averaged $111 a barrel in March, up about 20% from the previous month.

In the last week of March, gasoline prices at local gas stations topped 2,000 won ($1.65) per litre, much of which is government taxes.

In early March, the government extended the current 20% tax cuts for a further three months until the end of July, with the temporary tax cut scheme due to expire at the end of April.

A 30% fuel tax reduction results in a reduction of 574 won per liter of gasoline at the pump.

Tuesday’s decision came after President-elect Yoon Suk-yeol’s transition team called for tax cuts to be further expanded to help ease the burden on consumers from rising energy costs.

The government had previously estimated that the three-month extension of a 20 percent fuel tax cut would likely cut tax revenue by 1.4 trillion won. The transition team projected that a 30% tax cut would lower tax revenue by another 700 billion won.

As part of a related initiative to ease the burden of rising energy costs, the government will provide oil price-related subsidies for three months until the end of July to drivers of freight trucks, d buses and coastal freighters suffering from rising diesel prices.

To counter rising commodity prices, the government will also apply zero percent of the tariff rate quota on aluminum strip, foundry alloys used to produce secondary batteries and automobiles, while guaranteeing additional supplies of wheat and in maize through alternative channels.


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