SEOUL-- South Korea is reviewing whether to further cut fuel taxes as inflationary pressure has built up amid surging energy costs, the finance minister said Thursday.
The government is considering whether to lower fuel taxes by a record 30 percent from the current 20 percent as oil prices have spiked amid Russia's invasion of Ukraine.
Early this month, the country decided to extend fuel tax cuts by 20 percent by three months until end-July in an effort to curb inflation. The tax cut is set to expire at the end of April.
"We are in the final stage of reviewing whether to expand a cut on fuel taxes," Finance Minister Hong Nam-ki told a government meeting.
He said the government plans to announce additional measures to curb inflation Tuesday, including increasing the number of items subject to import tariff cuts.
The presidential transition team called on the government to cut fuel taxes by 30 percent, citing the need to ease the burden on people.
Dubai crude, South Korea's benchmark, soared to US$108.38 per barrel Wednesday, up from $77.12 at the end of last year. It hit a yearly high of $127.86 per barrel on March 9. South Korea depends mainly on imports for its energy needs.
South Korea's consumer prices grew 3.7 percent on-year in February amid soaring energy costs. Inflation rose more than 3 percent for the fifth straight month, well above the BOK's inflation target of 2 percent.
The Bank of Korea and the International Monetary Fund forecast Korea's inflation to grow 3.1 percent this year.
A 30 percent fuel tax cut translates to a reduction of 574 won (47 cents) per liter of gasoline at local gas stations.
The government earlier estimated the extension of a 20 percent fuel tax cut will likely reduce tax revenue by 1.4 trillion won.
The transition team projected tax revenue may fall an additional 700 billion won if the country decides to cut fuel taxes by 30 percent.
Meanwhile, E1 Corp. and SK Gas Co., two major importers of liquefied petroleum gas (LPG), announced Thursday they will raise the domestic supply prices by 140 won per kilogram in April, following surges in international prices. In March, the companies increased LPG prices by 60 won per kilogram.
Source: Yonhap News Agency