Trade association urges Korea not to advance oil tax overhaul

Oct 12, 2004 02:00 AM

The government should not rush to revamp an oil tax system because it could deal a harsh blow to local gas stations, a trade association said.
The call by the Korea Oil Stand Association (KOSA) comes as the government is allegedly poised to hike diesel and LPG prices earlier than planned by adjusting taxes on them. The government's initial energy-tax overhaul plan calls for raising the cost of diesel and LPG to 75 % and 60 % of the gasoline price, respectively, by July 2006.

However, the government, faced with the introduction of diesel-powered passenger vehicles in January, is pushing to move up its implementation. The accelerated cost increase will send sales at gas stations, already hit by record-high oil prices and an economic slump, tumbling, it claimed.
According to KOSA's estimate, the wholesale price of diesel rose 52.7 % to 942 won ($ 0.82) per litre in August from 617 won in June 2001.

Oil prices have been rocketing upward, with November crude rising to a high of $ 53.80 a barrel on the New York Mercantile Exchange.
The Korea Petroleum Association, another industry group, also criticized the government's plan, saying it should cut taxes on gasoline rather than raise diesel and LPG taxes.

Source: Asia Pulse
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