Home > Business > Economy

Gov't extends fuel tax cut, citing geopolitical tensions and crude price volatility

Published: 21 Aug. 2024, 10:46 Updated: 21 Aug. 2024, 16:40

SHIN HA-NEE
[email protected]

Prices are displayed at a gas station in downtown Seoul on Wednesday. The Ministry of Economy and Finance announced Wednesday that it would extend fuel tax cuts for two months through October. [YONHAP]

The government extended the fuel tax cut by two months until the end of October, citing geopolitical uncertainties and heightened crude price volatility.

The announcement was made by Finance Minister Choi Sang-mok during a ministerial meeting on economic affairs held at the government complex in central Seoul on Wednesday.

"The price volatility of crude oil has increased as of late due to the intensified geopolitical tensions in the Middle East region, and this may further add a burden on livelihoods,” said Choi during the meeting.

Finance Minister Choi Sang-mok speaks during a ministerial meeting on economic affairs held at the government complex in central Seoul on Wednesday. [NEWS1] (서울=뉴스1) 허경 기자 = 최상목 경제부총리 겸 기획재정부 장관이 21일 서울 종로구 정부서울청사에서 열린 경제관계장관회의에서 모두발언을 하고 있다. 2024.8.21/뉴스1

The reduction rate, which was adjusted to the current level on July 1, was kept unchanged. The current fuel tax stands at 656 won (44 cents) per liter of gasoline, a 20 percent reduction compared to the standard rate, and 407 won per liter of diesel, a 30 percent cut.

The most recent decision marks the 11th fuel cut extension since November 2021, when inflation surged amid the raging Covid-19 pandemic.

The reduction rate for the fuel consumption tax was set at 20 percent when the cut was first implemented, and rose to 30 percent in May 2022. The government upped the rate to a record 37 percent in the latter half of 2022 due to soaring inflation, before adjusting it down to 25 percent for gasoline and 37 percent for diesel and liquefied petroleum gas in January.

During the latest ministerial meeting, the finance minister also outlined some of the government's main agenda items and vision for next year's budget, which is set to be announced next week.

"In order to address a variety of policy needs, the government will dismantle the barriers between administrative branches and strengthen cooperation with a focus on each project,” said Choi. A support package for the younger generation, including a government-backed internship program, was discussed during the meeting for joint budget planning among relevant government branches.

Updated, Aug. 21: Added details about other agenda items discussed during the meeting.

BY SHIN HA-NEE [[email protected]]