Tax on Diesel Fuel

Choi Young-rok, Deputy Minister of Fiscal Affairs at the Ministry of Strategy & Finance says  that the government is not going to raise the tax on diesel fuel in the tax law amendment in the Sejong Government Complex on June 25.
Choi Young-rok, Deputy Minister of Fiscal Affairs at the Ministry of Strategy & Finance says that the government is not going to raise the tax on diesel fuel in the tax law amendment in the Sejong Government Complex on June 25.

 

The Ministry of Strategy & Finance of South Korea announced on June 26 that it is not going to raise the tax on diesel fuel in the tax law amendment scheduled to be released late next month.

The issue was examined for the past one year by the government in an effort for particulate matter reduction.

During the course, the government studied the necessity of adjusting relative energy prices, including adjustment of the price of diesel to 90% of that of gasoline from the current level of 85%. Recently, multiple news outlets reported that the adjustment is an established fact and the price of diesel can reach 120% of that of gasoline as the case may be.

“We have reached a conclusion that the adjustment is rather ineffective, and the government is not going to raise the tax,” the ministry explained on June 26. It mentioned that the conclusion is grounded on the fact that most of the particulate matter in South Korea comes from abroad, oil consumption is price inelastic, there are vehicles benefitting from fuel subsidies and not affected by the tax rate adjustment, and it could pose an increasing burden on self-employed small business owners.

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