Taxes Account for 57 Percent of Gasoline Prices

Taxes Account for 57 Percent of Gasoline Prices

Over half the money South Korean drivers pay to fill up their tanks ends up in government coffers as various taxes, including transportation and special excise taxes.

According to the data submitted to Rep. Ooh Che-chang of the Uri Party by the Ministry of Finance and Economy yesterday, the average retail prices for unleaded gasoline was 1,545 won ($1.63) per liter as of August. Of that figure, 57.3 percent, or 885 won, were taxes.

Taxes also accounted for 47.3 percent of the consumer price of diesel, mostly used for buses and trucks, which stood at 1,298 won per liter on average.

Among the 30 member countries of the Organization for Economic Cooperation and Development (OECD), a ratio of taxes to retail gasoline prices was 13.4 percent in the United States, 29.4 percent in Canada and 44 percent in Japan as of July.

However, most European drivers paid more taxes per liter of gasoline than Korean drivers. The tax to gasoline price ratio stood at 63.7 percent in Britain, 61.3 percent in Germany and 61 percent in France.

However, compared to their income, Koreans are spending more to buy gasoline compared to their counterparts in advanced countries, because of higher taxes levied on gasoline, according to the ministry.

With the gasoline price averaging $1,655 per kiloliter and the per-capita gross national income (GNI) reaching $16,291 last year, the country’s proportion of gasoline prices to its per per-capita GNI came out at 10.2.

It was higher than those of most OECD member nations. The proportion for the United States came out at 2, 3.5 for Japan and 6.9 for Italy.

“The country’s ratio of gasoline prices to income ranks about fifth highest among the 30 OECD countries,’’ a ministry official said.

He also said the government needs to spend about 13 billion won more per year if the international oil price increases by a dollar per barrel.

“Even if oil prices climb by a dollar per barrel a year, import tariffs on crude oil and various oil-related taxes grow by some 70 billion won, offsetting the government’s increasing spending on oil,’’ he said.

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