"15th Extension on Fuel Tax Cut with Lower Discount Rates: Gasoline Now 738 Won/L, Diesel 494 Won/L (Summary)"

# South Korea Extends Fuel Tax Cuts with Adjusted Rates Amid Inflation Concerns The South Korean government has announced a two-month extension of its temporary fuel tax reduction, initially set to expire at the end of this month. However, the rates will see partial restoration, with gasoline tax cuts reduced from 15% to 10%, and diesel and liquefied petroleum gas (LPG) butane tax cuts adjusted from 23% to 15%. This decision, despite a fall in global oil prices, reflects the government's effort to ease inflationary pressures and mitigate the financial burden on households amidst high exchange rates and rising consumer prices. # New Fuel Tax Rates Effective Until June According to the Ministry of Economy and Finance, the extended tax cuts will remain in effect until the end of June. Under the revised policy, the effective fuel tax rates per liter will be: - Gasoline: KRW 738, down KRW 82 from the pre-reduction rate of KRW 820. - Diesel: KRW 494, reduced by KRW 87 from KRW 581. - LPG butane: KRW 173, decreased by KRW 30 from KRW 203. An official from the Ministry remarked, “We have decided to partially restore fuel taxes, considering recent trends in global oil prices and inflation, as well as the impact on fiscal revenue. This adjustment aims to prevent a sharp increase in the public’s fuel expenses.” # A Longstanding Policy Amid Global Oil Volatility This extension marks the 15th continuation of the temporary fuel tax cuts since their introduction in November 2021. Initially, the tax discount was set at 20%, later rising to 30% in May 2022 and peaking at 37% in July 2022 due to a spike in international oil prices. Since January 2023, the government has gradually trimmed the tax reduction rates. For instance, gasoline tax cuts were maintained at 25% through June 2022 before being lowered to 20% from July to October of the same year. From November 2022 to April 2023, the government further reduced the tax cuts to 15% for gasoline and 23% for diesel and LPG butane. The latest move represents the fourth partial restoration of fuel tax rates under the program. # Enhanced Monitoring to Prevent Hoarding and Market Disruptions To prevent potential price manipulation or stockpiling in response to the tax adjustment, the government has enacted new restrictions effective immediately. For the next month, oil refiners and distributors will face temporary limits on fuel shipments. Excessive hoarding or withholding of sales without legitimate reasons will be prohibited. Specifically, fuel shipment volumes will be capped at 115% of the same period last year for gasoline and diesel, and 120% for LPG butane. The Ministry of Economy and Finance plans to collaborate with the Ministry of Trade, Industry and Energy, the National Tax Service, and the Korea Customs Service to rigorously monitor and manage hoarding activities. To facilitate public reporting of such activities, the government has launched a hotline through its oil management agency and consumer protection organizations, accepting reports of violations until July 31. The amended enforcement ordinances for the Transportation, Energy, and Environment Tax Act and the Individual Consumption Tax Act are scheduled for public notice starting on May 23, with implementation set for June 1 following Cabinet approval.