New tax cuts in Turkey as inflation rockets

Turkish President Recep Tayyip Erdogan on Monday announced value-added tax (VAT) cuts on several products to fight inflation.

The VAT cuts included mostly necessities, such as hygiene products and medical equipment, Erdogan said at a press conference after a cabinet meeting.

“We have decided to reduce the VAT on products such as detergent, soap, toilet paper, napkins and baby diapers from 18 percent to 8 percent,” he said.

The government will also reduce the financial burden on the construction industry by cutting the VAT on landed property to 8 percent, the president added.

In the agricultural sector, the country will reduce VAT to 1 percent on all kinds of certified seed, seedling and sapling deliveries, and to 8 percent for some products such as milk collection tanks, according to Erdogan.

The country’s inflation soared to 54.4 percent in February, the highest in nearly 20 years.

Under price hike pressures, the government reduced in February the VAT on basic food products from 8 percent to 1 percent.

Erdogan announced in December last year a record 50-percent rise in the minimum wage to help offset surging living costs amid high inflation.

Turkey’s central bank has kept the benchmark interest rate unchanged since January, halting an easing cycle that sparked a currency slump in the latter half of 2021.

The Turkish lira has lost roughly 60 percent of its value since 2021. ■

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