Government cuts tax on electricity

Government cuts tax on electricity

Government cuts tax on electricity

The government has decided to reduce the value-added tax (VAT) on electricity, President Recep Tayyip Erdoğan has said.

“The VAT was cut down from 18 percent to 8 percent for electricity used in residences and agricultural irrigation,” Erdoğan announced following a cabinet meeting on Feb. 28.

With this cut, electricity costs will decline between 8 percent to 14 percent, depending on consumption, the president added.

After the VAT reduction, households will save as much as 7 billion Turkish liras each year on electricity bills, Erdoğan said.

In January, a gradual tariff was introduced for households’ consumption.

Under the new tariffs, consumption up to 150 kilowatt-hours (kWh) a month would cost 1.37 liras per kWh, and consumption above this limit would cost 2.06 liras, corresponding to 50 percent and 127 percent increases in electricity prices. However, the limit, which lower tariffs apply, was later lifted to 210 kWh.

Erdoğan said after the cabinet meeting that this limit was also increased to 240 kWh.

The gradual tariff was also introduced for businesses, and there will be a 25 percent discount for the businesses which consume up to 900 kWh per month of electricity, according to the president.

“With this scheme, businesses will pay 7 billion liras less for their electricity bills annually,” he said.

The move on electricity came after the government lowered the VAT on staple foods from 8 percent to 1 percent earlier this month.

Speaking after the cabinet meeting, Erdoğan reiterated the government’s determination to fight inflation, which he said is affecting all nations across the world, particularly Europe, just like “the pandemic.”

“We will bring the inflation problem under control by the summer months,” he said.