Fuel tax cut to remain if oil prices remain high, Hong says

Economy

Published: 23 Feb. 2022, 19:19

Fuel tax cut to remain if oil prices remain high, Hong says

Korea plans to extend fuel tax cuts if energy prices remain high through next month in a move to help curb consumer inflation, Finance Minister Hong Nam-ki said Wednesday.

In November last year, the government cut fuel taxes by a record 20 percent in a bid to tame inflationary pressure. The measure will be in effect until end-April.

"If energy prices continue to stay at a higher level in March, it seems inevitable for the government to extend fuel tax cuts on oil and liquefied petroleum gas (LNG)," Hong said during a visit to an oil storage facility in Ulsan.

"High energy prices have added strain on the people ... The government will make a decision on whether to extend tax cuts within next month," he added.

The government also plans to "actively review" a further reduction in import tariffs on raw materials if their prices rise due to geopolitical tensions over Ukraine, the minister said.

Simmering tensions between Russia and the United States over Ukraine have pushed up already — high oil prices. Russia is one of the largest oil producers in the world.

Dubai crude, Korea's benchmark, soared to $96.01 per barrel Tuesday, up from $77.12 at the end of last year. Korea depends on imports for most of its energy needs.

Currently, Korea holds a crude stockpile that could last for 106 days, or around 97 million barrels, and has no problems in ensuring stable energy supplies in the short term, according to the finance ministry.

But the ministry vowed to continue to closely monitor developments surrounding Ukraine and devise preparatory steps to minimize potential impact on energy supplies and the broader local economy, it added.

Yonhap