Gov't to extend fuel tax cuts through July to combat rising energy costs

South Korea’s government announced Thursday it will extend fuel tax cuts by two months, keeping the reduced rates in place through July. Deputy Prime Minister and Finance Minister Koo Yun-cheol confirmed the decision at a ministerial meeting in Seoul, citing ongoing pressure from rising energy costs tied to the Iran war. The current tax reductions—15% for gasoline and 25% for diesel—will remain unchanged. This means fuel tax per liter stays at 698 won (50 cents) for gasoline, a reduction of 65 won from the standard rate, and 436 won for diesel, down 87 won from the usual 523 won. The steeper cut for diesel reflects its critical role in industrial operations. The measures were initially introduced on March 27 alongside a second round of oil price caps to ease financial strain on households. They were set to expire at the end of May but were extended due to persistent inflation, which rose 2.6% last month—the highest increase in over a year. Energy prices alone surged 21.9%, adding 0.84 percentage points to overall inflation. The government emphasized monitoring international oil trends, petroleum prices, and consumption patterns to assess further extensions. Kang Gi-ryong, deputy vice minister at the Ministry of Finance and Economy, noted that discussions on ending the measures are not yet finalized, with contingency reserves of 4.2 trillion won secured for potential adjustments. The Ministry of Trade, Industry and Energy will evaluate long-term operational plans.