Government "Considering Ending Fuel Tax Reduction"

Amid growing concerns over a shortfall in tax revenue this year due to a sharp decline in corporate tax, the government has begun considering ending the fuel tax reduction as part of normalizing tax support measures.

According to related ministries on the 31st, the Ministry of Economy and Finance is focusing on a plan to gradually abolish the fuel tax reduction and is coordinating the timing of the announcement. An official from the Ministry of Economy and Finance stated, "We are reviewing a plan to end the fuel tax reduction, which is set to expire at the end of next month."

The government has extended the fuel tax reduction measure until the end of June. Since the temporary fuel tax reduction was first implemented in November 2021, it has been extended nine times. As a result, gasoline currently benefits from a price reduction of 205 won per liter, and diesel sees a reduction of 212 won per liter.

The government is considering normalizing the fuel tax because international oil prices have stabilized since the end of March. On this day, the July delivery price of West Texas Intermediate (WTI) crude oil was trading at $79.02 per barrel, down 0.27% from the previous session, and Brent crude was trading at $83.20 per barrel, down 0.48%. Compared to the peak in September last year when Brent crude prices soared due to concerns over Middle East conflicts, international oil prices have fallen by about 15%.

The decrease in national tax revenue due to the sharp drop in corporate tax is also related to this measure. Ending the fuel tax reduction would allow for additional tax revenue from transportation, energy, and environmental taxes.

From the beginning of this year through April, national tax revenue was 8.4 trillion won less than the same period last year, influenced by a decrease in corporate tax (12.8 trillion won) and other factors. The progress rate of national tax revenue against this year's budget is 34.2%, similar to last year's 33.9%, which was the worst tax revenue shortfall on record.