20-percent fuel tax cut extended for additional 3 months

Economy

Published: 04 Mar. 2022, 14:08

20-percent fuel tax cut extended for additional 3 months

Gasoline pumps at a gas station in Seoul. Inflation pressure caused by rising prices of international oil have become a major concern. [YONHAP]

The fuel tax cut, which was to end in April, will be extended for another three months as the Russia-Ukraine conflict has pushed up the price crude oil, which feeds into higher prices at the pump for Koreans.

During a government meeting on Friday, Finance Minister Hong Nam-ki said the fuel tax cut implemented in November to minimize the impact of inflation caused by high oil prices will run for another three months.

"We will look into measures to expand the fuel tax cut if the economic uncertainties widen further if crude oil prices increase beyond current levels," Hong said.

The government meeting on consumer prices was the first in five years.

On Nov. 12, the fuel tax was cut by 20 percent, reducing the cost by about 164 won per liter — gas is taxed at 820 won per liter plus the 10 percent value-added tax.

Between November 2018 and May 2019, the government temporarily cut fuel taxes 15 percent as crude rose above $80 per barrel. The cut was reduced to 7 percent for an additional three months.

Finance Minister Hong Nam-ki, second from right, attending a government meeting on consumer price at the government complex in Seoul on Friday. It is the first meeting on inflation in five years. [YONHAP]

Friday's meeting was held on the same day Statistics Korea released the latest consumer price report.

According to the report, consumer prices in February were up 3.7 percent year-on-year, the fifth consecutive month in which the figure was above 3 percent.

The report does not fully reflect the Russian invasion of Ukraine.

In February, fuel prices were up 19.4 percent on year — gasoline 16.5 percent, diesel 21 percent, kerosene 31 percent and LPG gas for automobiles 24 percent.

Manufactured goods prices were up 5.4 percent, and dining out 6.2 percent, the biggest increase since December 2008.

The price of a sashimi dinner was up nearly 10 percent, and a beef dinner 8.2 percent.

The price of fresh produce fell 0.9 percent, compared to a 6 percent on-year rise in January.

Agriculture, livestock and fishery product prices increased 1.6 percent on year, from a 6.3 percent rise in January.

Green onion prices were down 60 percent, apple prices fell 20 percent and rice prices were down 6.3 percent.

Pork prices were up 12.4 percent, imported beef 26.7 percent and hanwoo Korean beef 5.1 percent. Strawberry prices were up 20 percent, tangerines 20 percent and grapes 23 percent.

"We expected consumer prices to continue to go up," said Eo Woon-sun, senior official at Statistics Korea.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]