S. KOREA TO EXPAND FUEL TAX CUTS; DIESEL FROM 10 TO 25 PCT, GASOLINE FROM 7 TO 15 PCT

SEOUL, March 26 (Bernama-Yonhap) -- South Korea will more than double its temporary fuel tax cut in a bid to ease the financial burden on consumers and industries amid the prolonged conflict in the West Asia, the finance ministry said Thursday, Yonhap News Agency reported.

Under the latest measures to support people's livelihoods, the current tax cuts -- 7.0 per cent on gasoline and 10 per cent on diesel -- will be expanded to 15 per cent and 25 per cent, respectively.

The measure, which had been set to expire in April, will be extended through the end of May, according to the ministry.

"Diesel is the most essential fuel for industry, logistics and everyday livelihoods," Finance Minister Koo Yun-choel told reporters, noting that global diesel prices are typically rising faster than those of gasoline.

As a result of the envisioned tax reductions, the fuel tax per litre, including the value-added tax, will fall by 65 won (US$0.04) to 698 won for gasoline and by 87 won to 436 won for diesel.

The expanded tax cuts will take effect April 1, when the relevant regulations are officially promulgated, but will be applied retroactively starting Friday, when the government adjusts the maximum retail prices for petroleum products.

South Korea, which depends heavily on imports for energy, is particularly vulnerable to external price shocks, which often drive inflation.

"If the situation worsens, we plan to consider additional cuts depending on international oil prices and the conflict," the minister said.

Under the law, fuel taxes can be reduced by up to 37 per cent, leaving room for further cuts if the West Asia conflict intensifies.

South Korea first introduced the fuel tax cut in November 2021 as a response to rising energy prices. The government has since extended the measure, adjusting the rates in accordance with changes in the global energy market.

-- BERNAMA-YONHAP