Tax cut leads to 1.4 trillion won in lost revenues

According to a report submitted by South Korea’s Finance Ministry to parliament, tax revenues earned from oil consumption amounted to 13.9 trillion won (US$11.93 billion) in 2008, down from 15.3 trillion won (US$13.13 billion) a year earlier, or a loss of 1.4 trillion won (US$1.2 billion) due to a tax reduction. A separate research conducted by the government showed that around 60% of a tax cut on petroleum products in March 2009 translated into lower domestic oil prices, but the impact was short-lived, with prices bouncing back only a few weeks after the measure went into effect. In July 2008, crude oil prices spiked above US$140 per barrel. (October 22, 2009)