Finance Minister Choi Sang-mok said Friday the government will extend the tax cut on fuel consumption by an additional two months in an effort to curb inflation and ease economic burdens on the people. The government has applied a 25 percent discount on the consumption of gasoline and a 37 percent discount on the consumption of diesel and liquefied petroleum gas, which were supposed to expire this month. "Global oil prices have made an upturn again recently, and I think it is inevitable to extend the tax cut by another two months through the end of April," Choi said during a meeting with reporters. Dubai crude, South Korea's benchmark, rose to US$79.84 per barrel this month, rising from $77.33 in December and $78.85 in January, amid the Israel-Hamas war and other geopolitical uncertainties. South Korea depends on imports for most of its energy needs, and the government has implemented such a fuel tax cut scheme since 2021, though the reduction rate has been adjusted in accordance with global energy price s. Choi said that inflation is expected to stay around 3 percent in the first half before reaching its target rate of 2 percent by around the end of this year. The finance ministry expected this year's prices to grow 2.6 percent. In January, consumer prices, a key gauge of inflation, rose 2.8 percent on-year in January, marking the first time that the figure fell below 3 percent in six months. "The government will continue to make all-out efforts to stabilize prices, including earmarking greater budget for discount programs for fruits and farm produce," the minister said. Asked about the impact of such tax relief measures on state revenue, Choi stressed that the country is unlikely to suffer a shortfall in tax revenue this year, and the government's policy focus is now on how to better support the livelihood of the people and revitalize growth. Last year, the country suffered more than 50 trillion won of tax revenue shortfall amid an economic slowdown. Speaking of possible tax benefits for corporate bi rth incentive programs, Choi said that the ministry will set tax schemes that "will not cause burdens on companies and employees." Last week, President Yoon Suk Yeol instructed officials to devise tax benefits and other measures to encourage companies to have birth incentive programs for their employees, after builder Booyoung Group said it will provide employees with 100 million won ($75,000) per birth to help boost the country's record-low birthrate. "We are reviewing various options, and details are expected to be available in around early March," Choi said. Booyoung has said that it had already delivered a combined 7 billion won to 70 employees, who had one child or more since January 2021, but in the form of a "gift," not "earned income," to reduce their tax burden. South Korea's fertility rate-- the number of children that are expected to be born to a woman over her lifetime -- hit a record low of 0.78 in 2022, far below the replacement level of 2.1 needed to maintain the country's population at 51 million. Source: Yonhap News Agency
