More than half of gasoline price is tax... Taeyoungho "Fuel tax reduction to be promoted until 2024"

55.9% of Gasoline Retail Price Is Tax
Proposal to Amend the Restriction of Special Taxation Act

Tae Young-ho, member of the People Power Party. (File photo) [Image source=Yonhap News]

[Sejong=Asia Economy Reporter Joo Sang-don] It has been revealed that more than half of the domestic gasoline retail price consists of taxes. With the recent rise in international oil prices, if gasoline prices increase further, the burden on households is likely to grow. In response, Tae Young-ho, a member of the People Power Party, is pushing to propose a bill that includes tax reductions until the end of 2024 to alleviate fuel cost burdens.

According to the "Price Fluctuation Status by Fuel Type including Gasoline" submitted by the National Assembly Legislative Research Office to Representative Tae on the 29th, as of July 2021, the total tax imposed on regular gasoline (1,629.3 KRW) is 910.5 KRW per liter. This means that 55.9% of the retail price is tax.

The tax imposed on indoor kerosene is a total of 173.7 KRW per liter, accounting for 18.6% of the retail price (932.2 KRW), and the tax on diesel for vehicles is a total of 674.8 KRW per liter, making up 47.3% of the retail price (1,425.5 KRW).

Taxes imposed on fuels such as gasoline include the Transportation Energy Environment Tax, Individual Consumption Tax, Education Tax, Automobile Tax on vehicle operation, and Value-Added Tax. Additionally, public charges such as import levies, quality inspection fees, and safety management charges are also imposed.

The Transportation Energy Environment Tax was converted from the special consumption tax imposed on gasoline and diesel in 1994 to a transportation tax to secure investment funds for social overhead capital (SOC), and in 2007, its taxation purpose was expanded and renamed the current Transportation Energy Environment Tax. As of July, 529 KRW per liter is imposed on regular gasoline, and 375 KRW per liter on diesel for vehicles.

The Individual Consumption Tax was renamed from the special consumption tax imposed on kerosene and others in January 2008, with 63 KRW imposed on indoor kerosene. The Education Tax, established in July 1996, imposes 15% of the Individual Consumption Tax or Transportation Energy Environment Tax on gasoline and diesel. Regular gasoline is charged 79.4 KRW, indoor kerosene 9.5 KRW, and diesel for vehicles 56.3 KRW.

The Driving Tax, established in January 2000, was renamed Automobile Tax on vehicle operation in November 2011, imposing 26% of the Transportation Energy Environment Tax on gasoline and diesel.

The import levy is 16 KRW per liter on crude oil and petroleum products, and the quality inspection fee, which is charged to inspect whether petroleum products distributed domestically meet quality standards, is 0.5 KRW per liter for general fuel oil.

Representative Tae plans to propose a partial amendment bill to the Restriction of Special Taxation Act next month to reduce various taxes imposed on gasoline and diesel. The main points are to exempt value-added tax on regular gasoline and diesel used as automobile fuel until December 31, 2024, and to reduce the Transportation Energy Environment Tax, Education Tax, and Automobile Tax on vehicle operation by 15%.

Representative Tae said, "Amid the increasing burden on citizens' living expenses due to recent inflation, the prices of automobile fuels such as gasoline and diesel are also continuously rising, becoming a factor in household burdens. Especially for gasoline and diesel, which are major automobile fuels, about 50% of the fuel price consists of taxes, so the proportion of taxes excluding the product cost in fuel costs is excessive. Therefore, it is necessary to alleviate the fuel cost burden through tax support."

This content was produced with the assistance of AI translation services.