[Insight & Opinion] How to Ensure Immediate Impact from Fuel Tax Cuts

Although the fuel tax has clearly been reduced, complaints are growing that consumers cannot feel the effect of the price cut. Some consumer groups claim that oil refiners and gas stations are not properly reflecting the government's fuel tax reduction in fuel prices. The government's passive measures to check for collusion among gas stations are tiresomely outdated. The oil industry's excuse that they are doing their best to ensure the price reduction effect appears quickly is also unconvincing.

The controversy over the fuel tax reduction is not new. It is a chronic problem caused by the Transportation, Energy, and Environment Tax Act, which stipulates that oil refiners producing gasoline and diesel must pay the fuel tax at the time of product shipment. Gas station operators should not be asked to forgo the fuel tax they have already paid to refiners. The government's cowardly attitude of passively watching the conflict between gas stations and consumers from a distance is very disappointing.

There is a way to resolve the controversy. The National Tax Service should collect the fuel tax directly. It is not difficult. The National Tax Service already collects value-added tax directly through sellers. It is also possible for the National Tax Service to track gas station fuel tank inventories and refund part of the fuel tax collected from refiners. This can be achieved by actively utilizing information systems. The government already provides substantial fuel tax refunds and subsidies to transport operators and taxi businesses. Tracking inventories at the roughly 10,000 gas stations would not be difficult at all.

The "Transportation, Energy, and Environment Tax," which began as the "Transportation Tax" in 1994, will be converted to an "Individual Consumption Tax" starting in 2025. The flimsy excuse of securing funds for energy consumption modernization and environmental protection was very weak from the start. It was also wrong to repeatedly extend the sunset clause every three years since 2009 without presenting a long-term operational direction. The "Petroleum Product Import and Sales Contribution," which has become a petty cash fund for the Ministry of Trade, Industry and Energy, should also be abolished.

The fuel tax is a very effective means of curbing indiscriminate consumption of gasoline and diesel. However, excessively high fuel taxes encourage the temptation of "fake fuel." There needs to be active recognition that "tax-evaded fuel," which has not paid fuel tax, is a serious social evil that undermines fairness and justice in our society.

Distorting market prices through the fuel tax can no longer be tolerated. Diesel, which trades at a higher price than gasoline in the international market, should not be disguised as cheap fuel in the domestic market. The outdated notion that diesel should be supplied cheaply because it is an industrial fuel must be discarded.

It is also important for consumers to be able to directly verify the newly introduced individual consumption tax amount and payment through receipts. The government's cowardly stance of shifting fuel tax collection to refiners while quietly pocketing the tax is no longer acceptable.

The international energy market is fluctuating so wildly that it is impossible to predict even a moment ahead. Crude oil prices, which soared fearfully above $130 per barrel, have suddenly plunged below $100. The flexible operation of the individual consumption tax is becoming more urgent. A system that automatically links the elasticity rate to fuel prices may be necessary. Consumers cannot wait indefinitely for administrative leniency.

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