Fuel tax cut to be extended by 2 months on Middle East tensions

The finance ministry said Wednesday it will extend the tax cut on fuel for automobiles by another two months until the end of October as concerns linger over the Middle East crisis. South Korea has been applying a 20 percent discount on gasoline consumption and a 30 percent discount on diesel and liquefied petroleum gas consumption, which were supposed to expire at the end of this month. While the country previously applied a 25 percent and a 37 percent cut on gasoline and diesel prices, respectively, the ministry decided to adjust the rate in July, citing dwindling tax revenues, among other reasons. "Amid the resurgence of tension in the Middle East, the volatility of global oil prices has increased, which may place additional burdens on the people," Finance Minister Choi Sang-mok said during a meeting with economy-related ministers. The government began implementing a fuel tax cut scheme in 2021 and has extended it since then, with the reduction rate being adjusted in accordance with global energy pric es. South Korea depends on imports for most of its energy needs, and rising global oil prices have caused inflationary pressures to flare up in the country. Consumer prices, a key gauge of inflation, rose 2.6 percent on-year in July, compared with a 2.4 percent increase the previous month. Prices of petroleum products climbed 8.4 percent on-year in July, the highest growth since October 2022. Source: Yonhap News Agency