Sohn Il-seon and Kim Hyo-jin
The South Korean government will extend the fuel tax break for another four months until the end of August but phase out the cut from the current 15 percent to 7 percent starting May 6.
The government said Friday it decided to extend its tax relief on gasoline, diesel and LPG butane by another four months to Aug. 31. The tax cuts, which were the first relief in excise tax in a decade, started Nov. 6 and were set to expire on May 6.
The revised tax rates, to be effective from May 7, would raise gasoline prices by 4.6 percent to 65 won ($0.06) per liter, diesel by 3.5 percent to 46 won, and LPG butane by 2.1 percent to 16 won.
Consumers would have felt prices double if not for the partial incentive, the government said, adding that the move translates into about 600 billion won of tax revenue.
The decision was made in consideration of global oil price trends, financial burden of low-income households and small businesses, and faltering domestic consumption amid the slowing economy, the government said.
The last time Korea offered a temporary fuel tax cut was during the height of the global financial crisis in 2008, when the government delivered a 10 percent tax relief for about 10 months.