Turkish gov’t to cut tax on fuel price to beat lira plunge, oil rise
In a measure responding to lira weakness and rising crude oil prices, the Turkish government on May 17 said Turkey will lower the special consumption tax level to offset any fuel price rises driven by these factors.
According to a cabinet decision issued on the Official Gazette, the special consumption taxes on any fuel products will be lowered in case of any increases in these prices due to an increase in oil prices and a loss in the lira.
A recent increase in global oil prices and an ongoing decrease in the lira have put an additional pressure over the country’s inflation rate by hiking transport costs.
The share of transport item is 17.47 percent in Turkey’s inflation basket, and this item has recently played a significant role in pushing up the consumer price index.
Oil prices hit their highest level since November 2014 on May 17, with Brent crude creeping closer to $80 per barrel as supplies tighten and tensions with Iran simmer.
The increase in oil and commodity prices have also negatively affected Turkey’s balance of payments, as the country’s dependence on foreign energy sources is quite high.