Gov't to mull extending fuel tax cut to curb inflation

Finance Minister Choi Sang-mok speaks during a meeting with ministry officials on inflation and other pending issues in Seoul on Monday. [YONHAP]

Finance Minister Choi Sang-mok said Monday the government will review an extension of the tax cut on fuel consumption in an effort to curb inflation and ease economic burdens on the people.

Choi made the remarks during a meeting on the economy presided over by President Yoon Suk Yeol meant to discuss ways of bringing still-high inflation under control.

The government extended the fuel tax cut by two months from March, and has applied a 25 percent discount on the consumption of gasoline and a 37 percent discount on the consumption of diesel and liquefied petroleum gas.
“If global oil prices continue to be unstable, the government will review the extension of the fuel tax cut beyond April,” Choi said. “The government will make all-out efforts to achieve a 2 percent inflation level at an early date.”

Consumer prices, a key gauge of inflation, rose back to over 3 percent in a month in February to stand at 3.1 percent on high prices of fruits, vegetables and other fresh food items, as well as high energy costs.

The government has said that inflation has been moderating, but the pace has been and is forecast to be slower than earlier expected before reaching the target rate of 2 percent by around the end of this year.

The Korean economy has been on a recovery track led by rising exports, but domestic demand remains sluggish amid still-high inflation and high interest rates.

Earlier in the day, Choi held a separate meeting with officials of his ministry and instructed them to come up with measures to promote investment for “balanced economic recovery.”
“The current inflation situation is still serious and economic sentiment remains low. All employees must stay vigilant and make all-out efforts for responses,” Choi said.

Last week, the government and the ruling People Power Party announced a decision to inject 150 billion won (US$113 million) for discount programs, subsidies and various policy measures meant to stabilize prices of agricultural and livestock products.

The government had initially earmarked 106 billion won for discount programs for farm produce purchases this year.

Yonhap