South Korea's finance minister Monday ruled out lowering taxes on oil products as it could hurt the country's already worsening fiscal condition.
"The government is not considering cutting oil taxes at the moment," Finance Minister Yoo Il-Ho told reporters on the sidelines of a conference in Seoul.
"Under current situation of low oil prices, oil tax cut would cause more negative fallout on tax revenues than positive effect," Yoon said. "It is not appropriate to adjust oil tax under current conditions."
His remarks came amid calls by civic groups and some lawmakers to reduce oil taxes to help boost domestic demand amid the country's slowing economy.
Last week, opposition lawmakers asked for the government to lower oil taxes to make consumers enjoy benefits from the sharp drops in crude prices.
Civic groups held a forum February 15 to press the government to cut oil taxes. At the forum, Oh Jung-keun, a professor at Konkuk University in Seoul, called for a 30% cut in oil taxes.
"Oil taxes [in South Korea are] too high compared with other nations, such as Japan and the US. There's a room for a 30% reduction," Oh said the forum.
International crude prices have plunged by two-thirds since late 2014, but retail gasoline prices have fell just 20%.
Gasoline taxes are Won 869 (70 cents)/liter, equivalent to 64.4% of the pump price of Won 1,350/l last week, according to state-owned Korea National Oil Corp.
Taxes account for Won 629/l, or 57.2%, of gasoil's pump price of Won 1,099/l. Domestic oil taxes are included in the transport tax, driving tax, education tax and value-added tax.
South Korea's oil demand rose 4.1% to a record high of 855.06 million barrels, or 2.43 million b/d, last year, compared with 821.56 million barrels in 2014, as low prices propelled consumption of transportation fuels.
