Reducing Fuel Tax Cut Further... Ruling Party Says "Fuel and Tariff Rate Cuts, Immediate Legislation If Necessary"

Current Legal Cap on Fuel Tax Reduction at 30%
Possibility of Expansion Through Legislative Amendment
Government Urged to Address Exchange Rate and Interest Rate Measures
Democratic Party Also Launches Livelihood Priority Action Team

[Asia Economy Reporters Hyunju Lee and Hyunji Kwon] As concerns over economic contraction grow due to soaring inflation, the People Power Party is preparing legislation to lower tariffs, including fuel taxes. Since the cause of strong inflation lies more on the supply side than demand, the intention is to support government policies as much as possible through legal amendments. Accordingly, there is increasing weight on the possibility that the current 30% fuel tax reduction could be expanded through bipartisan legislative amendments.

On the 14th, Kwon Seong-dong, floor leader of the People Power Party, said in a meeting with reporters after the party’s floor strategy meeting at the National Assembly, "Today, we established a Special Committee for Price and Livelihood Stabilization under the Policy Committee, and through this, we are directly contacting the government to request fuel tax cuts and various tariff reductions," adding, "If legislation is necessary, we will proceed immediately."

Kwon Seong-dong, floor leader of the People Power Party, is attending the party's policy meeting held at the National Assembly on the 14th and is talking with Sung Il-jong, chairman of the policy committee, during the meeting. Photo by Yoon Dong-joo doso7@

At the floor strategy meeting that day, the People Power Party ordered the government to maximize the flexible fuel tax rate, reduce tariff rates on quota items, and implement related measures on exchange rates and interest rates. In particular, regarding fuel tax, they hinted at future measures through bipartisan legislation. Seong Il-jong, chairman of the People Power Party Policy Committee, said at the meeting, "We hope the government will maximize the flexible fuel tax rate to reduce the burden on the people," adding, "If adjustment through the flexible tax rate is not possible, prices must be controlled later through bipartisan legislation."

The government currently reduces fuel tax by up to 30% through a presidential decree. If the flexible fuel tax rate adjustment method is used, the actual reduction rate of the fuel tax can increase up to 37%. However, the industry views the effect as minimal since oil prices have recently surged sharply in a short period. Therefore, the argument to further expand the fuel tax reduction by amending the Individual Consumption Tax Act is gaining traction. Floor leader Kwon said, "The government’s position must be determined, and we will discuss and submit a bill."

Attention is focused on the additional reduction rate. Currently, Assemblyman Seo Byung-soo of the People Power Party has proposed the ‘Transportation, Energy, and Environment Tax Act Amendment’ and the ‘Individual Consumption Tax Act Amendment’ to allow a 100% fuel tax exemption. In a phone interview that day, Seo explained, "(Fuel tax reduction) timing is important, and if the timing is missed, it loses meaning," adding, "The government must have discretion to act flexibly and timely." Generally, tax laws are legislated under government leadership, but given the urgency, once the National Assembly is organized, the Planning and Finance Committee is expected to handle the bill first. Seo said, "When the bill was first proposed, even lawmakers thought it was excessive, but recently the mood has completely changed."

In this regard, the People Power Party established the Special Committee for Price and Livelihood Stabilization under the Policy Committee and will review various measures for price stabilization, including fuel tax and tariffs, on the 16th. Assemblyman Ryu Seong-geol, chair of the Special Committee, said at the meeting, "Gasoline prices have reached the highest level in 10 years," adding, "As a specialized committee, we will fully listen to private sector opinions and derive practical solutions."

Since the opposition party is also facing a livelihood emergency, it is expected to respond positively to the ruling party. The Democratic Party of Korea launched the Livelihood Priority Action Group on the afternoon of the same day, with floor leader Park Hong-geun and Policy Committee chairman Kim Seong-hwan serving as head and deputy head, respectively. Park said, "Due to the prolonged Ukraine crisis, raw materials, grains, and oil prices are all soaring," adding, "We will assess the livelihood crisis situation and responsibly prepare and implement urgent legislative tasks."

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