President Calls for Anti-Inflation Measures
By Lee Hyo-sik
Staff Reporter
The government plans to cut taxes on gasoline and other oil products by 10 percent, as well as freeze public services and transportation fees to rein in surging consumer prices in the wake of high costs of crude oil and other raw materials.
For the first time in a decade, the incumbent head of state instructed the Cabinet to take all possible measures to tame inflation. ``The envisioned tax cut on oil products should benefit ordinary consumers, not those who drive a big luxurious passenger cars. The tax reduction should not lead to an increase in the consumption of gasoline and other fuels,'' President Lee Myung-bak said in his first Cabinet meeting.
He made the instruction as consumer prices rose 3.6 percent in February from a year earlier, due to a rise in prices of crude oil, agricultural products and public services fees.
Even though the 3.6 percent year-on-year increase is lower than last month's 3.9 percent, it is still higher than the Bank of Korea's target range of 2.5 to 3.5 percent.
In particular, consumers should have felt the inflation burden more heavily since the cost of living index, consisting of food and other daily necessities, rose even higher at 4.6 percent, according to the National Statistical Office.
The government plans to lower taxes on oil products by 10 percent this month. Tax on gasoline will be reduced by around 82 won per liter, and 58 won for diesel. Currently, a total of 745 won tax is levied on a liter of gasoline, and 528 won on diesel, as education tax, motor fuel tax and others.
Lee said increases in the prices of manufactured goods are unavoidable amid rising prices of crude oil and other commodities. ``But the government can control prices of daily necessities. To do so, we must take extraordinary measures. Municipal governments should also do their part by refraining from raising public utility charges and public transportation fees,'' Lee said.
To help improve the livelihood of the low-income bracket and the small-scale self-employed, the government decided to scrap excise taxes levied on liquefied petroleum gas used for taxis, slash commuting costs by 50 percent, freeze electricity fees in the first half of the year and cut private education costs.
Meanwhile, to encourage businesses to expand investment and create jobs, the Cabinet decided to scrap restrictions on conglomerates' cross-subsidiary investment in the first half of the year. Currently, a chaebol unit with assets of 2 trillion won or more is banned from making equity investments in an affiliated firm.
Also, manufacturers will be allowed to deduct 7 percent of money spent on facility investments from their taxable income.