Fuel Tax Cut Extended for 4 Months... "Expected Savings of 100,000 Won per Gasoline Car"

Government Extends Temporary Fuel Tax Reduction Until August 31
'Gasoline -25% · Diesel -37%' Maintained
"Fuel Prices Continue to Rise... To Ease Public Burden"

The government has decided to extend the temporary reduction of fuel tax, which was scheduled to end at the end of this month, by four months.

On the 18th, the Ministry of Economy and Finance announced that the measure to reduce the fuel tax on gasoline by 25% and on diesel and LPG butane by 37% will be extended until August 31.

An official from the Ministry of Economy and Finance explained, "This measure prioritizes alleviating the burden on the low-income economy despite the recent difficult fiscal conditions," adding, "Considering comprehensively that domestic fuel prices have been continuously rising following the announcement of crude oil production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and the OPEC Plus (+) group, which includes Russia and other non-OPEC major oil-producing countries, it was decided that continuous relief of the public's fuel cost burden is necessary."

Fuel tax is a tax imposed on petroleum-derived fuels. Including transportation, energy, and environmental taxes, as well as driving tax, education tax, and value-added tax, the tax amounts to 820 won per liter for gasoline, 581 won for diesel, and 203 won for LPG butane.

In the second half of 2021, as international oil prices rose and gasoline prices exceeded 1,800 won, the government reduced the fuel tax on gasoline, diesel, and LPG butane by 20% from November 12, 2021, to April 30, 2022. Afterwards, the reduction rate was increased to 37% regardless of fuel type, and since January this year, the reduction has been 25% for gasoline and 37% for diesel and LPG butane.

With this extension, the price reduction effect compared to the pre-reduction tax rate will be maintained for four months at 205 won per liter for gasoline, 212 won for diesel, and 73 won for LPG butane. The Ministry of Economy and Finance estimates that a passenger car that can travel 10 km per liter of gasoline and runs 40 km daily will save about 25,000 won per month, totaling 100,000 won over four months.

The government plans to implement the amendment to the Enforcement Decree of the Transportation, Energy, and Environment Tax Act and the Enforcement Decree of the Individual Consumption Tax Act from the 1st of next month, after consultations with related ministries, public notice, and the Cabinet meeting scheduled for the 25th.