Revenge Tax By Finance Ministry
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The government, which had promised not to further increase taxes, increased the Special Consumption Tax (OTV) rate on automobiles by 3 to 25 points. Upon the cancellation of the Extra-Motor vehicle Tax -imposed by the government- by the Constitutional court, the government decided to raise OTV on automobiles to compensate for the loss it experienced because of this cancellation.
Even though all budget targets have been attained, the government still seeks sources to make the payments due to the victims of the Imar Bank of Uzans, and its solution was to increase the tax burden of citizens.
According to the decree of the cabinet, which was promulgated in the Official Gazette and entered into force yesterday, OTV was increased from 27% to 30% on cars having an engine volume of less than 1600 cc, from 46% to 52% on cars having an engine volume between 1600 and 2000 cc, and from 50% to 75% on cars having an engine volume that is greater than 2000 cc. With a new arrangement, OTV on luxurious cars was raised more than that on normal cars.
Unakitan: I Expect 600 Trillion TL Income
Finance Minister Kemal Unakitan said that the new arrangement in the OTVs imposed on automobiles were expected to generate a revenue of 200 trillion TL for 2003 and 550-600 trillion TL for the next year. Unakitan told CNN Turk that the government aimed to collect an income of 1.1 quadrillion through the cancelled extra-motor vehicle taxes, and it succeeded to collect 700 trillion of it and that, “Our citizens trusted us and paid their taxes. Since this was cancelled, we will pay these back.” Unakitan said that this loss of revenue would be compensated by OTV and some other measures.
Businessmen and car manufacturers reacted at the raise in OTV saying that their improving car sales will begin dropping after this move. CHP leader Deniz Baykal dubbed the move as a “Sudden terror raid.” TUSIAD leader Tuncay Ozilhan said that the state should rather curb its own spending, instead of increasing the tax burden on the people.
The move of the government aims at attaining the year-end primary surplus target of 6.5 %.
Blow On Beverage
The government imposed a minimum tax on beer and other alcoholic beverages, whereby the Special Consumption Tax (OTV) on them cannot be less than 750 thousand TL for 1 liter of beer and 1 million TL for one liter of wine.
A Cabinet decree, which was promulgated in the Official Gazette and entered into force yesterday, brought about a minimum tax for alcoholic beverages. According to this decree, the minimum OTV amount, imposed on these beverages, will be between 750 thousand TL and 20 million TL in accordance with the type of the beverage. This decree does not change the existing tax rates, but puts forward a floor for them. The price of wines will not be affected much by this new arrangement, however, the price of imported alcoholic beverages will increase to a great extent.