South Korea has taken new measures to counter the inflation caused by high oil prices, by increasing the fuel tax cuts that began in November for a period of 6 months and intends to extend them for another 3 months.
Korean Finance Minister Hong Nam-ki said today, Tuesday, that his country will expand tax cuts on petroleum products by 30% from the current 20% for a period of 3 months, to reduce the impact of high energy prices that hit record levels due to the Russia-Ukraine war.
Inflation In Korea
“Inflation is the most important and most dangerous issue at the moment,” the finance minister stressed, adding that the government will intensify efforts to reduce its impact in the face of relentless price pressures .
In November, Seoul approved deep cuts in fuel taxes, amounting to 20% for a period of 6 months, due to expire in April, in an attempt to calm inflationary pressures.
The fuel tax on gasoline was reduced to 656 won ($0.55) per liter from 829 won, on diesel from 582 won to 466 won, and the liquefied petroleum gas tax decreased from 204 to 164 won.
Data on Tuesday showed that consumer inflation in South Korea accelerated to 4.1%, the fastest increase since 2011, driven by higher energy and commodity prices.
In previous statements, the Korean Finance Minister stressed that if oil prices continue to rise in March, there is no escaping the extension of tax cuts on oil and liquefied gas.
And oil prices rose last March, near the highest level in 14 years, and the benchmark Brent crude rose by 10.1% last month, and gains by 40.3% during the first quarter of 2022.
West Texas Intermediate crude also recorded monthly and quarterly gains by 4.8% and 33.3%, respectively.
Taxes make up about 40% of domestic gasoline prices, and the Korean government had adopted an earlier policy in 2018.
And during the month of November 2018, South Korea reduced fuel taxes by 15% for a period of 6 months, after oil prices exceeded $ 80 a barrel, and it expired in August 2019 after extending it several times.
The government also reduced fuel taxes for two months between March and April in 2000, and then in March 2008, which lasted 10 months.