Turkish gov’t hikes tax on cigarettes, alcoholic drinks

ANKARA

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The Turkish government has raised the special consumption tax on alcoholic drinks and tobacco products, according to a notice in the government’s Official Gazette on Dec. 1. The move is expected to push up prices by some 3-6 percent.

The increase coincides with a sharp decrease in the value of the Turkish Lira and follows hikes in special consumption taxes on luxury cars. 

The fixed tax on alcoholic drinks, excluding wine and similar beverages, will be increased by 10 percent. This is expected to push prices up by 3-4 percent, according to officials. 

Tobacco prices will increase by an average of 5-6 percent following a 7 kuruş ($0.02) hike in the tax on tobacco products. The price of a packet of cigarettes is slated to rise by around 50 kuruş as a result of the tax move.

Finance Minister Naci Ağbal told Reuters that the new taxes’ contribution to the budget would be around 3.24 billion liras ($929 million) with a 26 basis point effect over the inflation rate. 

“The effect of the tax hike in tobacco products will be around 0.26 over the inflation rate. We have kept our inflation target at 7.5 percent,” Ağbal added, as quoted by Reuters on Dec. 1.