Tax hike draft waiting for PM’s approval

Tax hike draft waiting for PM’s approval

Tax hike draft waiting for PM’s approval

Budget targets will not be met this year, according to Finance Minister Şimşek.

The Finance Ministry has prepared a draft law that would introduce new tax hikes, focused on automobiles, tobacco products, real estate investment trusts and title deed fees, daily Zaman reported yesterday.

The ministry drew up the draft after Finance Minister Mehmet Şimşek said this year’s budget targets will not be met. Work on new measures to increase tax revenue is in the preparation phase, said sources within the Finance Ministry, noting that this year’s tax collection performance will have an effect on any decision to raise taxes.

Prime Minister Recep Tayyip Erdoğan will make the final decision whether to implement the draft, which would generate an additional 10 billion Turkish Liras in tax revenue annually. Another option would be to keep public spending down.

Increasing the 37-percent special consumption tax (SCT) rate imposed on small-engine vehicles as well as luxury ones is among the measures suggested by the draft. Already-high fuel taxes are not among those to be raised.

The ministry also suggests lifting the discounted value added tax practice, and corporate tax exemption for real estate investment companies, which it is believed could alone bring in 500 million liras in revenue.

A new tax hike on tobacco products may go into effect in the new year. A fixed tax hike is suggested rather than a proportional tax. The latest hike was issued last year, increasing the SCT by four points to 69 percent.