- Tax Accounts for 57% of Gas Prices -
By Ryu Jin
Staff Reporter
Voices calling for a cut in the transportation tax levied on gasoline are rising as the average gas price has recently surpassed 1,600 won ($1.73) per liter in Seoul.
However, the government is reluctant to reduce the tax, despite mounting public criticism.
The government has maintained high taxes on gasoline and diesel oil since 1998 when it raised the transportation tax sharply in the wake of the 1997 financial crisis. Annual revenue from the tax amounts to about 23 trillion won ($24.8 billion), according to government statistics.
In 1998, the government claimed that it would reduce the tax to alleviate the burden of drivers if gas price exceeded 1,200-1,300 won per liter because of a sudden rise of international oil prices.
International oil prices, which stood at around $20 per barrel a decade ago, now hover around $60. But the tax has not been reduced.
Last week, the average gas price reached 1,532 won per liter, the highest in the past nine months, largely affected by soaring oil prices due to insecurity in Nigeria. In particular, the gas price in Seoul exceeded 1,600 won.
Pump prices at local gas stations get much higher because of the country’s peculiar pricing structure. While the ex-factory price (600 won) accounts for only 39 percent of the total, some 57 percent (about 900 won) is composed of various taxes _ transportation, mileage and education taxes _ all of which go to the government.
Critics say the proportion of taxes in the gas price of South Korea is about 5 percentage points higher than the average tax rate of member countries of the Organization for Economic Cooperation and Development (OECD).
Officials insist the government does not have any plan to reduce the taxes for the time being. ``Domestic gas prices have not risen so much in the past two years when compared with the hike in international oil prices,’’ one official said. ``The country, which depends heavily on imported oil, also needs to save energy.’’
Complaints from motorists, however, have been flooding the Internet homepages of relevant government ministries, including the Ministry of Finance and Economy and the Ministry of Commerce, Industry and Energy, in recent weeks.
One citizen, identified by the penname ``Easy Mark,’’ for example, urged the government to address the high gas prices by reducing taxes and imposing more regulations on petrochemical firms and gas stations. ``For ordinary people like me, the biggest concern is gas prices rather than housing prices.’’
But the people from the petrochemical industry also said they feel victimized since the average gas price has risen only 6 percent at home in the past five months, when the international oil price has hiked about 24.6 percent.
Critics say now is the time for the nation to engage in a serious discussion on the taxes levied on gasoline. ``What the government should do first to revive the people’s livelihood is reducing the oil-related taxes,’’ Kwandong University Prof. Hong Chang-eui said.
In the meantime, a grass-root boycott movement has also been spreading in the United States as the gas prices per gallon exceeded $3, according to news reports. CNN Money reported that e-mails with such messages as ``Don’t Pump Gas on May 15’’ are circulating among Internet users.