Fuel tax reduction extended to February, automobile tax cut until June 30; 19th extension for fuel measure
The government decided on the 24th to extend the fuel tax reduction measure, set to expire by the end of this month, by two months. The fuel tax is currently applied with a 7% reduction for gasoline and a 10% reduction for diesel, liquefied petroleum gas, LPG, butane, and the deadline will be extended until the end of February next year.
A source from the Ministry of Economy and Finance stated, "This extension was decided considering oil price volatility and the public's burden of fuel costs," adding, "Compared to the pre-reduction tax rate, the price per liter for gasoline will be lowered by 57 Korean won, diesel by 58 Korean won, and LPG butane by 20 Korean won, and this effect will be maintained for two months."
The fuel tax reduction began on November 12, 2021, and this measure marks the 19th extension decision.
The government also decided to extend the reduction period for the individual consumption tax on automobiles, which was originally set to end by the end of this year, by six months until June 30 next year.
The individual consumption tax rate for automobiles, originally 5%, is currently applied at a reduced rate of 3.5%. While the tax reduction limit for the individual consumption tax is 1 million Korean won, considering the reduction effects of the education tax and value-added tax (VAT), which are calculated in connection with the individual consumption tax, the maximum reduction available is 1.43 million Korean won.
The temporary reduction of the individual consumption tax on liquefied natural gas (LNG) and bituminous coal for power generation, introduced to alleviate the cost burden on energy public enterprises, will end by the end of this month. This decision was made considering the recent stability in power generation fuel prices.
The individual consumption tax on power generation fuels was 12 Korean won per kilogram for LNG, but currently, a 15% reduced rate of 10.2 Korean won is applied. For bituminous coal used in power generation, the tax was 46 Korean won per kilogram, but it has been lowered to 39.1 Korean won, which is 15% cheaper. After the reduction ends, the rates will revert to 12 Korean won and 46 Korean won per kilogram, respectively.