National Assembly Livelihood Special Committee, Fuel Tax Elastic Rate Set at 50% and Meal Expense Tax Exemption Limit Raised from 100,000 to 200,000 Won

Processed through the Legislation and Judiciary Committee on the 1st of next month and handled at the plenary session on the 2nd

[Asia Economy Reporters Oh Ju-yeon, Geum Bo-ryeong] The range of the fuel tax flexible rate will be expanded up to 50%. To stabilize the cost of living, the government expanded the fuel tax reduction rate from 30% to 37% on the 1st of this month, but with bipartisan agreement on the need for further expansion, it was decided to increase it to 50%.

Accordingly, the gasoline fuel tax, which was 516 won per liter until this month, is expected to drop further by 148 won to 368 won.

[Image source=Yonhap News]

On the 29th, the National Assembly's Special Committee on Stabilizing the People's Economy held a plenary session in the morning and passed bills to further expand the fuel tax reduction and to increase the non-taxable limit for employee meal allowances.

On that day, the ruling and opposition parties processed the "Partial Amendment to the Transportation, Energy, and Environment Tax Act," which includes expanding the fuel tax reduction rate to 50%. Although bills were proposed to adjust the flexible tax rate, currently at 30%, within the ranges of 50%, 60%, 70%, and 100%, the parties agreed on expanding the flexible fuel tax rate to 50%, jointly proposed by Representative Bae Jun-young of the People Power Party and Representative Shin Young-dae of the Democratic Party.

While it is true that preemptive measures are necessary to prepare for the ongoing economic crisis and prolonged high oil prices, concerns were raised that expanding the reduction rate to 60%, 70%, or 100% could impose too large a tax revenue burden.

According to the expert review report on the bill, expanding the flexible fuel tax rate range to 50% is expected to reduce tax revenue by about 15 trillion won.

Expert Jeong Myeong-ho stated, "If the amendment expands the current 30% flexible fuel tax adjustment limit, it is expected to alleviate the public's fuel cost burden and contribute to price stabilization. However, the specific extent of the flexible tax rate expansion needs to be decided by comprehensively considering the tax revenue decrease and the government's carbon neutrality policy."

Along with this, a partial amendment to the Income Tax Act was also passed to increase the non-taxable limit for meal allowances from the current 100,000 won per month to 200,000 won. This bill aims to provide benefits to workers struggling with high inflation, and the non-taxable limit for meal allowances had been frozen for 19 years since the 2003 amendment.

The bills passed on this day are scheduled to go through the Legislation and Judiciary Committee on the 1st of next month and be processed in the plenary session on the 2nd.

Remaining contentious bills, such as the abolition of the sunset clause on the safe freight rate system and the expansion of the tax credit limit for single-homeowners, will be discussed later. Previously, the ruling and opposition parties agreed to handle 29 bills directly related to the people's economy by forming a special committee on the people's livelihood.

Chairman Ryu said in a phone call on the day, "Today, we reviewed 12 bills focusing on fuel tax and non-taxable employee meal allowances, and other matters will be discussed in future meetings."

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