New taxes and levies were announced by Deputy Prime Minister and Foreign Affairs Minister Tansu Ciller on 22 July in an economic package to raise fresh financial resources. Key elements include a 6 per cent fund levy on import financing and a tax on income from treasury bills issued after 1 January 1997.
One aim of the measures is to help narrow the budget deficit and offset new spending such as the 50 per cent wage hike for civil servants announced in late June. The import levy on behalf of the Resource Utilisation Fund is controversial as such levies were ostensibly eliminated when Turkey entered an EU customs union on 1 January.
The Central Bank of Turkey says the levy will be deducted from short-term, deferred financing for imports, such as letters of credit and acceptances, and are an extension of surcharges already applied to domestic financing.
Traders expect the new measures to target consumer goods rather than capital investment goods which should be exempted by a provision excluding financing for projects with investment incentive certificates.
Trade officials say strategic commodities like oil, refined products, wheat and barley would also be exempted.
EU sources in Ankara estimate the additional revenues to be raised at about $50 million. Ankara has yet to notify the EU, as required by protocol and agreement, the sources add.
Ciller said the government's plans included the privatisation of telecommunications in 1997 and the sale of government property to attract Turkish savings held abroad, which are estimated to total $50,000 million. She promised further economies in government departments alongside moves to widen the tax base and improve tax collection.
You might also like...
A MEED Subscription...
Subscribe or upgrade your current MEED.com package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.