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S. Korea not considering 'windfall tax' on energy firms

16:30 January 26, 2023

By Kang Yoon-seung

SEJONG, Jan. 26 (Yonhap) -- South Korea's finance minister said Thursday the country is not considering the so-called windfall tax on energy companies, as local refiners have different business structures compared with European counterparts.

The remark came after Lee Jae-myung, who heads the main opposition Democratic Party, claimed that South Korea should adopt the policy to redistribute the excessive profits of energy firms amid the fluctuations in global resource prices.

"If a company makes profits, we can apply corporate taxes as designated by the law," Finance Minister Choo Kyung-ho said during a meeting with reporters.

The scheme centers on imposing an additional tax on gains made through external circumstances, including an abrupt fluctuation in energy prices, such as the hike sparked by the war between Russia and Ukraine.

While European countries are seeking to adopt the windfall tax, Choo pointed out that South Korea needs to consider the fact that local refiners do not own oil reserves and have different business structures.

"We should not consider a windfall tax just because (local energy firms) made profits over a specific period of time," Choo added.

Earlier in the day, the government announced its plans to boost energy vouchers and expand a discount of gas prices for vulnerable people to help them cope with surging costs of heating their homes.

Under the plan, energy vouchers for 1.17 million vulnerable households will temporarily be doubled to 304,000 won (US$246) per home this winter. State-run Korea Gas Corp. will also expand a discount of gas prices to as much as 72,000 won from 36,000 won for 1.6 million vulnerable households.

Finance Minister Choo Kyung-ho speaks during a meeting with reporters in the central city of Sejong on Jan. 26, 2023, in this photo released by the Ministry of Economy and Finance (PHOTO NOT FOR SALE) (Yonhap)

colin@yna.co.kr
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