SEOUL, March 26 — South Korea will more than double its temporary fuel tax cut in a bid to ease the financial burden on consumers and industries amid the prolonged conflict in West Asia.
Yonhap News Agency reported that under the latest measures to support people's livelihoods, the current tax cuts: 7.0 per cent on gasoline and 10 per cent on diesel, will be expanded to 15 per cent and 25 per cent, respectively.
The Finance Ministry said the measure, which had been set to expire in April, will be extended through the end of May.
"Diesel is the most essential fuel for industry, logistics and everyday livelihoods," Finance Minister Koo Yun-choel told the media today, adding that global diesel prices are typically rising faster than those of gasoline.
As a result of the envisioned tax reductions, the fuel tax per litre, including the value-added tax, will fall by ₩65 (RM0.17) to ₩698 (RM1.85) for gasoline and by ₩87 (RM0.23) to ₩436 (RM1.16) for diesel.
The expanded tax cuts will take effect on April 1, when the relevant regulations are officially promulgated, but will be applied retroactively starting tomorrow, when the government adjusts the maximum retail prices for petroleum products.
South Korea, which depends heavily on imports for energy, is particularly vulnerable to external price shocks, which often drive inflation.
"If the situation worsens, we plan to consider additional cuts depending on international oil prices and the conflict," he said.
Under the law, fuel taxes can be reduced by up to 37 per cent, leaving room for further cuts if the West Asia conflict intensifies.
South Korea first introduced a fuel tax cut in November 2021 in response to rising energy prices. The government has since extended the measure, adjusting the rates in accordance with changes in the global energy market.
