GOVT'S PLAN TO TAME FUEL COSTS

[Anchor Lead]

The government has presented another set of plans to deal with high fuel costs. Starting next month, the fuel tax cut will be increased to the legal maximum of 37 percent. Subsidies for diesel vehicles will be increased. Measures to lower airfares for domestic flights have also been announced.

[Pkg]

The government held its first emergency meeting of economic ministers to deal with soaring fuel prices. The ministers decided to increase the fuel tax cut to 37% from July to the end of the year. The government currently gives a record 30% fuel tax reduction but the tax cut will be expanded further to the maximum level allowed by law. The latest measure is expected to lower the price of gasoline by 57 won per liter and the price of diesel by 38 won per liter.

[Soundbite] Lee Chang-yang(Minister of Trade, Industry & Energy) : "As for gasoline, about 7,000 won per month on fuel cost will be saved additionally, which is expected to lighten people’s fuel cost burden."

The government also plans to ask gas stations and oil companies to lower prices at affiliated gas stations immediately and at independent gas stations within two weeks. Authorities will also lower the payment standard for diesel subsidies to help truckers and transport and logistics workers hit hardest by spiking diesel prices. The subsidy payment criteria has already been lowered from 1,850 won to 1,750 won this month, but it will go down even further to 1,700 won in July. Drivers of 440-thousand trucks and 20-thousand buses eligible for the subsidy now stand to receive even bigger assistance. In order to encourage the public to use public transport, the income deduction rate for public transport credit cards will be increased from 40% to 80%. The quota tariff on jet fuel for domestic flights will also be completely removed.

[Soundbite] Won Hee-ryong(Ministry of Land, Infrastructure & Transport) : "People feel that airfares are too high ahead of the summer vacation season. We will work hard to make people feel a noticeable drop in airfares."

There are concerns that such big cuts on fuel taxes may not be as effective as expected since international and domestic oil prices continue to climb.