Korea to extend fuel tax cut till end of 2023 given Israel-Hamas war

Finance Minister Choo Kyung-ho said in a ministerial meeting on Monday that the government will extend the tax cut from the end of October to stabilize oil prices that could escalate inflation, especially for energy and food.

Finance Minister Choo Kyung-ho speaks during a ministerial meeting held at the government complex in central Seoul on Monday. [MINISTRY OF ECONOMY AND FINANCE]

Korea will extend the tax cut on fuel consumption throughout the end of the year amid concerns about inflationary pressure caused by the outbreak of the Israel-Hamas conflict earlier this month.

Finance Minister Choo Kyung-ho said in a ministerial meeting on Monday that the government will extend the tax cut from the end of October to stabilize oil prices that could escalate inflation, especially for energy and food.

The government has applied a 25 percent discount on the consumption of gasoline and a 37 percent discount on diesel consumption.

The government started the discount on energy prices in Nov. 2021 to reduce the impacts of the heightened oil price on consumers following the Covid-19 pandemic.

Choo added the ministry will strengthen the on-site inspection of the oil retailers to prevent them from riding on the rise in global oil prices.

The U.S. West Texas Intermediate crude futures traded at around $87 on Monday compared to roughly $83 on Oct. 6, a day before the Palestinian Islamist group Hamas launched attacks against Israel.

“Armed conflict has intensified,” Choo said in a statement, noting the Israeli military is reportedly preparing to invade the Gaza Strip. “But no damage has been confirmed to have incurred on Korean residents or corporations operating in the region.”

He added, “Depending on how the situation unfolds, risks centered on energy and supply chain could spread again, which could result in resurfacing of difficulties amid stabilizing global inflation.”

BY JIN MIN-JI [jin.minji@joongang.co.kr]