Government Likely to Cut Fuel Tax... Hong Nam-ki Says "Action Next Week"

National Assembly Budget Committee Audit... Hong "Considering Tax Reduction per Liter Like in 2018"

Deputy Prime Minister for Economy Hong Nam-ki is attending the National Assembly's Public Administration and Security Committee's audit of the Ministry of Economy and Finance held at the National Assembly on the 20th, responding to lawmakers' questions. Photo by Yoon Dong-joo doso7@

[Sejong=Asia Economy Reporter Son Seonhee] The government has virtually decided to cut fuel taxes to alleviate the impact of soaring oil prices on the livelihood economy. On the 20th, Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, said, "Domestic gasoline prices are rising significantly, and there is an impact on the real economy, so the government is currently reviewing a fuel tax cut," adding, "There will be measures around next week."

At the National Assembly's Planning and Finance Committee's audit on the same day, in response to a question from Seo Byung-soo, a member of the People Power Party, about the possibility of a fuel tax cut, Deputy Prime Minister Hong replied, "We have been reviewing it internally." He added, "We are looking into reducing the tax per liter in the same way as in 2018," but was reserved about the specific reduction rate, saying, "We are considering several alternatives." Since this year's tax revenue has exceeded expectations significantly, the burden of revenue loss due to the fuel tax cut is expected to be minimal.

According to the New York Mercantile Exchange on the previous day (Eastern Time), the November West Texas Intermediate (WTI) crude oil price closed at $82.96 per barrel, up $0.52 (0.63%) from the previous day. This is the highest level in about seven years since October 2014.

With international oil prices approaching $83 and the won-dollar exchange rate rising, the perceived burden of oil prices domestically has intensified. According to Opinet, the oil price disclosure information service of the Korea National Oil Corporation, the average gasoline price in Seoul on the day recorded 1,813.83 won per liter, up 5.21 won from the previous day, also marking the highest level in seven years. With food prices such as rice, pork belly, and eggs already high, the rise in fuel prices is immediately impacting the livelihood economy.

At present, it is difficult to predict how long this high oil price trend will continue. Deputy Prime Minister Hong also said in response to a question about oil price forecasts, "I think high oil prices will not drop quickly for the time being."

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