ED Soaring fuel prices
Time to introduce flexible tax cut rate to ease people's burden
The government's phase-out of a gasoline and diesel tax break is adding fuel to rising gas prices and fanning the flames of the people's discontent.
The temporary six-month tax cut expired Monday. But the authorities should have considered pushing back the expiration period given the latest trend of higher oil prices on global markets.
For the past five months from Nov. 6 last year, the government had provided a 15 percent fuel tax cut. Now the rate has been reduced to 7 percent starting Tuesday. This reduced tax break has had the effect of pushing up fuel prices: gasoline by 65 won ($0.06) per liter, diesel by 46 won and liquefied petroleum gas (LPG) by 16 won.
People complain that the higher tax rate has forced them to bear the growing financial burden while the economy still shows no signs of recovering anytime soon.
Gas prices at stations have been increasing for the past 11 weeks due to rising international oil prices. Overall, pump prices have increased 13.6 percent on average over the past three months.
On the first day of the reduced fuel tax break, the average gasoline price at Seoul gas stations jumped 6.95 won to 1,603.09 won per liter. The national average soared 7.51 won to 1,507.63 won.
The oil price rise may not be seen as shocking as the six-month tax cut was expected to end. However, the problem is that the eventual increase of the fuel tax rate makes the people feel the financial pinch because it has come on top of the rising cost of living amid economic stagnation.
If international oil prices rise further and put more pressure on domestic fuel costs, this will see people have lighter pockets, depressing domestic consumption further.
President Moon Jae-in called for follow-up measures to ease the burden on the people, especially those in the low income brackets. However, the authorities have yet to take any concrete action.
The government must take fundamental measures to help stabilize oil prices by introducing flexible fuel tax rates that can be adjusted to the fluctuation of international oil prices.