Turkey took another step to boost consumption and its lira in the face of recession by extending on Thursday the deadline for tax cuts on cars and other goods and raising the withholding tax on some foreign currency deposits, Reuters reported.
Ankara had imposed the tax cuts last year to help tame inflation, which hit a 15-year peak in October and has since eased a bit to settle at around 20 percent.
Tax cuts on cars, commercial vehicles and home appliances were extended until June 30, while those on furniture, housing and title deed fees will remain in effect until Dec. 31, an update to the country’s Official Gazette showed.
The tax cuts were due to end on March 31, the date set for nationwide local elections for which President Recep Tayyip Erdoğan has been campaigning in support of his ruling Justice and Development Party (AKP).
The extension of tax cuts will trim 9 billion lira ($1.65 billion) from government revenues, a Turkish economy official said on Thursday, adding that its impact “can be overlooked” given the expected boost to consumption and the overall economy.
The move should postpone a rise in inflation when taxes return to previous levels and could give leeway to the central bank, which is expected to cut interest rates later this year. Last year’s crisis saw the lira lose nearly 30 percent against the dollar, prompting an economic contraction in the fourth quarter.
Source: Turkish Minute