Government Extends Fuel Tax Reduction by Two More Months Until End of July

Gasoline Down 15%, Diesel Down 25%

Yonhap News Agency

The government will extend the fuel tax reduction measure, which was scheduled to end at the end of this month, for an additional two months in order to mitigate the energy shock caused by the Middle East war.

On May 21, Deputy Prime Minister and Minister of Economy and Finance Koo Yooncheol presided over the Special Task Force for Livelihood Price Management and the External Economic Ministers' Meeting at the Seoul Government Complex and released the “Fuel Tax Operation Plan after June.”

To ease the public’s fuel cost burden following the outbreak of the Middle East war, the government implemented the second maximum price system in March, alongside the fuel tax reduction measure. The existing fuel tax reduction was originally scheduled to end at the end of May but has now been extended to the end of July.

The reduction rates remain unchanged at 15% for gasoline and 25% for diesel. As a result, the fuel tax per liter will remain at 698 won for gasoline, down by 65 won from 763 won, and 436 won for diesel, down by 87 won from 523 won.

The fuel tax is a tax paid by refiners to the state at the time of shipping petroleum products from the factory. By reducing this tax, increases in consumer prices can also be curbed. The government explained that a higher reduction rate is being applied to diesel, which is used primarily for industrial purposes.

In response to a question, Kim Wansoo, Director of the Environmental Energy Tax Division at the Ministry of Economy and Finance, explained, “According to the relevant notice, petroleum sales prices are calculated in consideration of the fuel tax reduction,” and added, “We believe the fuel tax reduction will be sufficiently reflected in consumer prices.”

The government has also left open the possibility of further extending the fuel tax cut. Last month, the consumer price inflation rate rose sharply to 2.6%, the largest increase in one year and nine months. In particular, petroleum product prices surged by 21.9%, raising overall inflation by 0.84 percentage points.

Kang Giryong, Deputy Minister at the Ministry of Economy and Finance, said, “We are closely monitoring the trends in international oil prices, changes in petroleum product prices and consumption, the impact on consumer prices, and the need to ensure that expenditures do not exceed the 4.2 trillion won in reserve funds secured for this purpose.”

He added, “There is not yet an active inter-ministerial discussion on the exact timing for ending the measure,” and continued, “The Ministry of Trade, Industry and Energy is reviewing future operational plans for the system, and we will share more information at an appropriate time.”

The Ministry of Economy and Finance plans to submit an amendment to the Enforcement Decree of the Transportation, Energy, and Environment Tax Act reflecting these changes to a future Cabinet meeting.

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