Will an Unexpected Windfall Tax on Oil Refiners Be Introduced?... Opposition Party Announces Legislative Push

Kim Sung-hwan "Final Ultimatum to Minister of Trade, Industry and Energy"
"Redistribution Amid Energy Pain
Last Chance to Avoid Heating and Electricity Bill Bombshell"

[Asia Economy Reporters Oh Ju-yeon and Park Jun-i] The Democratic Party of Korea has announced plans to legislate a windfall tax in response to the 'soaring heating costs.'

On the 31st, Kim Seong-hwan, chairman of the Democratic Party's Policy Committee, said at a press briefing held at the National Assembly, "Due to the recent surge in heating and electricity bills amid high inflation and high interest rates, not only basic livelihood security recipients but also middle-class citizens are suffering significant economic damage," adding, "Since President Yoon Seok-yeol made a progressive statement yesterday, we request the prompt creation of alternatives to ease the burden on the middle class and related supplementary budget measures, as well as a levy or voluntary fund on oil companies that have profited during the high oil price period, which would have the character of a windfall tax."

[Image source=Yonhap News]

Chairman Kim emphasized, "From the perspective of citizens facing the heating and electricity bill shock, this is the last chance," and added, "If the government remains indifferent even in the current situation, the Democratic Party believes that there will be no choice but to push for separate windfall tax legislation."

At the party floor strategy meeting held that morning, Kim also stressed the introduction and legislation of a windfall tax, saying, "When the public suffers from soaring energy costs, it is common sense for companies that have made huge profits to share at least some of the pain." He said, "If the government does not respond despite repeated requests from the Democratic Party, we will actively pursue the introduction of a separate windfall tax like in Europe," and directed his remarks to Minister Lee Chang-yang of the Ministry of Trade, Industry and Energy, saying, "According to Article 18 of the Petroleum Business Act, a levy should be collected from petroleum businesses that have made excessive profits and returned to the people suffering from the heating cost shock."

Kim said, "If I were to put it bluntly, I gave the Minister of Industry and Energy a final ultimatum today," adding, "We want to try to do well even with the existing law. If that does not work, we will consider whether to proceed with the windfall tax bill proposed by our party or other additional legislation under the circumstances."

Regarding the amendment to the Grain Management Act, he explained, "Following the National Assembly Act procedures, the Grain Management Act opened a new path as the first case where the Legislation and Judiciary Committee did not gatekeep," adding, "The Broadcasting Act is next in line, with the 60-day deadline arriving on February 2. The Safe Freight Rate System deadline is February 8, and the Nursing Act and Medical Act are scheduled to be processed by the Health and Welfare Committee's resolution on March 5, with official letters sent to the Legislation and Judiciary Committee."

Kim emphasized, "The Legislation and Judiciary Committee initially submitted the bill as originally proposed, but if the People Power Party requests amendments within the scope that does not undermine the bill's intent, we will actively consider them. We hope President Yoon will not exercise his veto and that the law can be practically enforced."

Regarding the Safe Freight Rate System, he said, "Since the government recently proposed other amendments related to the standard freight rate system, if there are reasonable parts in the amendments, we believe they should be reflected and processed to the maximum extent," adding, "If there are better institutional improvements, they should be handled, but it is difficult to accept regressive elements that unilaterally reflect only employers' opinions and remove penalty provisions."