Turkey raises tax thresholds on cars in attempt to curb inflation
Turkey's government increased tax thresholds for cheaper cars to help increase sales and curb inflation, which surged to 36.1 percent in December.
The government increased the price limit for a 60 percent special consumption tax on motor vehicles with an engine size smaller than 1,600cc to 175,000 liras ($12,886) from 150,001 liras, according to a decree published by President Recep Tayyip Erdogan’s office in the Official Gazette on Thursday.
Turkey is seeking to curb price increases after the lira dived by 44 percent against the dollar last year and the central bank cut interest rates despite accelerating inflation. Treasury and Finance Minister Nureddin Nebati said at the weekend that measures to be taken by the government would slow inflation to single digits within a few months, a prediction questioned by many economists.
The government raised the maximum price on cars qualifying for a tax rate of 45 percent to 120,000 liras from 92,000 liras. The threshold for a 50 percent tax increased to between 120,000 liras and 150,000 liras.
Turkish inflation is expected to nudge about 40 percent in the coming months. The rate may peak at around 55 percent in May, according to U.S. investment bank JPMorgan.