Turkey increases tax on car sales
Turkish Finance Minister announced an increase in Special
Consumption Tax (SCT) on passenger car sales: from 30% to 37% under 1,600cc, from 52% to 60% up to 2,000cc and from 75% to 84% above 2,000cc, translating into a 5% rise in retail prices. The reason behind the hike was stated as 143% year-on-year increase in auto imports bill to $7.5 billion in the first seven months. Producers have warned earlier that every percent increase in taxes on auto
consumption would result in 2-3% drop in segment sales.
Market players were expecting the tax hike, which is possibly part of the package requested by the IMF to address concerns over
Turkey's increasing current account deficit. Analysts regard such steps positive, since they would evidence government's firm commitment to impose selective measures against widening current account deficit.
Meanwhile, the Turkish
Automotive Distributors' Association decided to reflect the increase in special
consumption tax on automotives to retail prices, the organization said. Most of the domestically sold cars are in the 1600 cc engine category, where taxes are raised from 30% to 37%, the association added. Therefore, Turkish
automotive dealers are increasing their prices between 8-10%.