Recent tax hike on fuel boosts budget revenue
Posted by meb at July 18th, 2009
The Finance Ministry expects to add some TL 1.4 billion in extra revenue to its coffers thanks to a recent tax hike on fuel. The government announced on Wednesday that the private consumption tax (ÖTV) would increase by Kr 20 for gasoline, Kr 15 for diesel and Kr 10 for liquefied petroleum gas (LPG), sparking outrage from consumers. Fuel distribution companies had to raise their prices on Thursday, bringing further criticism against the government and fuel market regulators. The Finance Ministry expects to take in an anticipated TL 1.4 billion this year from the tax hikes.
Data from the Petroleum Industry Association (PETDER) show that fuel consumption in Turkey was 3 million cubic meters in 2008; this number is expected to decline by roughly 6 percent this year. However, despite the decline, the state will still make a considerable amount of money with the latest price increases. Based on PETDER’s estimation, the Finance Ministry will earn TL 290 million from gasoline, TL 1 billion from diesel and TL 110 million from LPG taxes in the second half of this year.
Alleging that the increasing tax rates have an unfair impact on competition in the market, sector representatives argue that many fuel dealers are facing bankruptcy. In particular, many small distributors are losing strength, and some are closing down their shops. The ÖTV on gasoline makes up 69 percent of the total cost to consumers, 61 percent for diesel and 63 percent for LPG.
Meanwhile, a recent value-added tax (KDV) increase on hotels, holiday resorts and facilities with more than three stars is not expected to bring about a sizeable increase to state revenue.
The KDV on tourism facilities was increased from 8 percent to 18 percent. Oktay Varlıer, president of the Tourism Investors Foundation, said Friday that he did not think this 10-point increase would provide the expected income boost. “Most hotels are still applying last year’s prices for rooms. Hence they stand to lose a lot with this KDV hike. This fact creates unfair competition,” he argued, adding that the government made the decision without consulting hotel managers for their opinion. Varlıer also hinted that sector representatives might appeal to the Constitutional Court, demanding that the KDV hike be repealed.
source: Today’s Zaman
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