Korean Energy Economic ReviewISSN:1599-7057(Print)에너지경제연구원·한국자원경제학회

This study analyzes the effects of the temporary fuel tax cut on the retail prices of Korean gas stations. The Korean government temporarily reduced the fuel tax by 15% for 6 months from November 6, 2018 to May 6, 2019, after which the cut was reduced by 7% but the deadline was extended from May 7 to August 31, 2019. While the governments’s temporary tax cut was unusual, as it has been only three times including this time, not much research has been conducted. This paper uses the daily price data of regular gasoline, premium gasoline, and diesel from January 1, 2018 to December 31, 2019, for 541 gas stations in Seoul to investigate to what extent the tax cut policy was reflected in retail prices across the characteristics of gas stations and different types of fuels. The results show that the tax cut was the most reflected in the regular gasoline prices, compared to diesel or premium gasoline. In particular, 96% and 94% of fuel tax cut was reflected in retail prices of regular gasoline sold at self-service stations and Altteul stations, respectively. Our results can be interpreted that consumers with relatively high price elasticity, such as consumers for regular gasoline, self-service stations, and Altteul stations, received the most fuel tax cuts.