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Fuel tax cuts get extended to end of October

Published: 14 Aug. 2025, 16:06 Updated: 14 Aug. 2025, 20:06

Gasoline and diesel prices are displayed on a board at a self-service gas station in Daejeon on Aug. 14. [JOONGANG ILBO]

The government will extend its temporary fuel tax cut, which was initially set to expire at the end of August, through the end of October.

The Ministry of Economy and Finance said Thursday that the two-month extension will continue to apply to taxes on transportation fuel, including gasoline, diesel and liquefied petroleum gas (LPG).

Under the current rate, gasoline taxes are cut by 10 percent and diesel and LPG taxes by 15 percent. At the gas station, the tax reduction lowers gasoline prices by 82 won per liter (20 cents per gallon), diesel by 87 won and LPG by 30 won.

Fuel tax cuts are a policy tool the government often uses during periods of oil market volatility. The current reduction began in November 2021 as a temporary measure in response to surging energy prices during the Covid-19 pandemic. It has now been extended 17 times over the past four years.

At its peak, the tax cut reached 37 percent but has since been scaled back to the current 10 to 15 percent range. The latest extension is set to run through Oct. 31.

Whether the government will allow the cut to expire after that remains uncertain, as global oil markets continue to show instability driven by tariff-related risks linked to U.S. President Donald Trump.

If the government ends the tax cut during a period of rising oil prices, retail fuel prices could spike sharply. That risk has made policymakers reluctant to roll back the reduction.

As of Wednesday, Dubai crude traded at $67.40 per barrel on the Singapore oil market, up from $59.56 in May when prices had briefly dropped into the $50 range.

Korean retail gasoline prices have also edged up, reaching 1,667.7 won per liter on Wednesday, compared to a recent low of 1,626.99 won in June.

The government plans to approve amendments to enforcement decrees related to the Traffic, Energy and Environment Tax Act and the Individual Consumption Tax Act at a Cabinet meeting on Aug. 26. The revised tax policy will take effect on Sept. 1.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY AHN HYO-SEONG [[email protected]]