Hong Nam-ki "Expanding Fuel Tax Cut to 30%... Trio of Measures to Ease High Oil Price Burden" (Update)

Published 05 Apr.2022 08:33(KST)

The Second Price-Related Ministers' Meeting Under the Moon Jae-in Government

[Image source=Yonhap News]

[Asia Economy Sejong=Reporter Kim Hyewon] The government will expand the fuel tax reduction rate to 30% starting in May. It has prepared a 'three-pronged set to ease high oil price burdens,' including providing fuel price-linked subsidies for commercial freight trucks and buses, and reducing the vehicle LPG sales levy by 30%.

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, announced this on the 4th at the Government Sejong Complex during a price-related ministers' meeting. This is the second price-related ministers' meeting held since the Moon Jae-in administration, following the one on the 4th of last month.

Deputy Prime Minister Hong said, "To reduce the perceived fuel costs for citizens struggling with high oil prices, we have prepared a three-pronged set to ease high oil price burdens and will implement it promptly."

He explained, "The fuel tax reduction rate will be expanded from the previous 20% by an additional 10 percentage points to 30%, and will be implemented for three months from May to July."

With this fuel tax reduction, assuming a daily driving distance of 40 km and fuel efficiency of 10 km/l, fuel costs (gasoline) can be reduced by 30,000 KRW. Compared to the 20% fuel tax reduction, the fuel cost burden decreases by 10,000 KRW.

Deputy Prime Minister Hong also stated, "To alleviate the burden on the public transportation and logistics industries struggling with the rapid rise in diesel prices, fuel price-linked subsidies for diesel will be temporarily provided for three months to commercial freight trucks, buses, and coastal cargo ships."

He added, "To support low-income livelihoods, the sales levy on vehicle butane (LPG), mainly used by taxis and small business owners, will be reduced by 30% (-12 KRW/l) for three months."

Additionally, in response to raw material supply instability triggered by the Ukraine crisis, the government will apply a 0% tariff quota on aluminum strips (8%) and casting alloys (1%) used in secondary batteries and automotive processes, and extend the special measures period until the end of the year by six months, including increasing the credit release limit for non-ferrous metals (from 3 billion to 5 billion KRW) and extending the release period (from 9 to 12 months).

To ease cost burdens on the processed food industry, the government will apply a tariff quota (from 30% to 0%, 12,810 tons) during the non-application period of seasonal tariffs for chip potatoes (May to November) and increase the low-rate tariff quota (TRQ) volumes for soybeans and processed peanuts, which have high import dependency.

Deputy Prime Minister Hong emphasized, "Price issues are very important and sensitive matters directly linked to disposable income, and stable economic management through controlling price increases is ultimately a win-win path for all economic actors," urging households and businesses to join the government's full-scale response efforts.