ANKARA, July 16, 2010 (FBC) Turkey has raised taxes on gasoline to finance its 1.12 trillion lira ($42.2 billion) budget for the 2023 budget, starting on February 16, 2010 after an earthquake in February and a presidential election in May.
The additional fuel tax will help with the budget deficit, which has ballooned to 263.6 billion lira in the first five months of the year, higher than 124.6 billion lira a year ago, but could also drive inflation down to 38.21 percent from June. 24-year high of 85.51% last October.
The wide deficit is mainly due to increased spending on rebuilding ahead of May’s election, when President Tayyip Erdogan was re-elected for a third term, as well as after an earthquake in southern Turkey.
The earthquake, which killed more than 50,000 people, is expected to cost Turkey more than $100 billion in total.
In the latest move to shore up the treasury’s cash reserves, the tax rate on gasoline rose from 2.52 lira ($0.1) to 7.52 lira per liter, while the tax on diesel oil rose from 2.05 lira to 7.05 lira.
The impact of the tax adjustment, combined with value-added tax (VAT), is expected to add about 6 lira to final pump prices, up more than 20% per liter, according to Reuters calculations.
A 1.12 trillion lira increase to Ankara’s budget was approved by parliament on Saturday, following other recent tax hikes including a two percent increase in value-added tax in an effort to bolster state coffers.
The lira has lost more than 80% of its value since 2018 and is set to depreciate by more than 28% by 2023, raising the price of a wide range of products in the country, which imports everything from oil to food.
($1 = 26,0953 lira)
Reporting by Ece Toksabay, Ali Kucukgocmen and Nevzat Devranoglu Editing by Diane Craft and David Goodman
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