The government said on the 26th it will expand the fuel tax cut for two months starting on the 27th to ease the burden from rising oil prices due to the prolonged Middle East crisis. The cut rate will rise to 15% from 7% for gasoline and to 25% from 10% for diesel. As a result, gasoline is expected to drop by 65 won per liter and diesel by 87 won.
That day, the government announced an emergency economic response plan to the Middle East war. After the U.S. airstrike on Iran in on the previous month, domestic oil prices rose on concerns about supply shortages. The government implemented a maximum oil price system on the 13th. However, average gasoline prices in Korea remain high, from 1,693 won per liter transfer 1,819 won as of the 25th before the Middle East crisis, and diesel from 1,597 won transfer 1,815 won.
The fuel tax on gasoline is 820 won per liter, but 763 won is currently applied. That is because the government has been cutting it continuously since the end of 2021 to ease the burden of consumer prices. The cut rate peaked at 37% in 2022 and kept falling to 7% in Nov. last year. If the government raises the cut rate to 15% this time, the tax will be 698 won, down 65 won. The diesel fuel tax will fall by 87 won from 523 won per liter to 436 won. The fuel tax cut period was originally until the end of Apr., but it will be extended by one more month.
The government plans to pass a revision to the Enforcement Decree of the Transportation, Energy and Environment Tax Act at the Cabinet meeting on the 31st. From tomorrow until the 31st, before the Cabinet approval, it will be applied retroactively by refunding or crediting taxes already paid.
The government will also raise the payment ratio of the diesel price-linked subsidy for freight and bus operators to 70% from 50% through next month. Currently, freight and bus owners can receive support for 50% of the portion exceeding 1,700 won per liter of diesel. In addition, tolls on expressways for commercial freight trucks and route buses operating after 9 p.m. will be exempted for one month.