Who Qualifies for Gov’t Oil Tax Rebate?

The government will spend 7.18 trillion won to ease the effects of high oil prices on workers, the self-employed, low-income earners and cargo transporters, in introducing a blanket tax rebate to Korea for the first time.

The tax rebate will start next month and last for a year. So who qualifies for the rebate?

Low-income workers and the self-employed will receive tax rebates of up to 240,000 won per person over a year. Those who will be working for or running a business from next month to June next year also qualify. The amount will be decided according to income earned last year, regardless of oil taxes paid.

Workers who earned less than 30 million won will get 240,000 won; those who earned more than 30 million and less than 32 million won 180,000 won; those who earned 32 million to 34 million 120,000 won; and those earning 34 million to 36 million won 60,000 won.

The amount of 240,000 won is equivalent to half of the estimated increase in oil expenses of 480,000 won. When income level is divided into five groups, the bottom three quintiles spend an additional 40,000 won monthly for transportation due to higher oil prices.

Workers can apply for the tax rebate through their employers. The National Tax Service will deposit the money directly into their bank accounts in October this year and April next year, but the workers also can be paid monthly upon request.

The rebate will go to individuals, not households. Double-income couples earning less than 30 million won each can receive a combined 480,000 won.

Self-employed businessmen who registered with the National Tax Service, filed a consolidated income tax return for fiscal 2007, and earned less than 24 million won last year can receive the rebate. Those who earned 20 million won or less will get 240,000 won, and those who earned 20 million to 24 million won will be classified into three groups and get 60,000 to 180,000 won.

Self-employed businessmen must apply for the rebate individually every six months. They can file an application in November for tax rebates in the second half this year, which will be paid in December. Rebates for the first half of next year will be paid in June next year for those who applied in May.

Drivers of diesel buses, cargo trucks and cargo ships will get subsidies according to the amount of diesel they used. Over a period of a year starting next month, if the diesel price increase exceeds 1,800 won per liter, half of the amount will be returned to the drivers. The oil subsidy will stay at 293 won per liter.

To limit the burden on the national budget, the government capped the subsidy at 476 won per liter. The standard price will be the average diesel price of each city and province announced by Korea National Oil Corp.

The payment will be made in the same way as the oil subsidy. Those who use oil credit cards will see the subsidy deducted from their bill. Those who want to receive the subsidy later can apply at a city or county office (bus and truck drivers) or marine and port offices (cargo ship captains).

Drivers of cargo trucks smaller than a metric ton will receive an oil subsidy of up to 100,000 won a year. They can use oil credit cards and the subsidy will be deducted from their bill.

People receiving basic livelihood security assistance (860,000 households) and those with severe physical disabilities (30,000 households) will get 20,000 won in monthly oil subsidies for a year. The amount is equivalent to half of the increased oil expenses of 40,000 won for the lowest income quintile.

The payment will be deposited to their bank accounts used for security or disablement payments at the end of each month.

Among security assistance recipients, those who still use briquettes for heating will get briquette coupons worth 77,000 won per household. Authorities will decide the beneficiary list.

Farmers and fishermen will get the same subsidy as drivers of buses and cargo trucks. They can also use oil credit cards or apply with their cooperative association.

higgledy@donga.com