Turkey Triples Fuel Tax

Turkey has increased fuel taxes, including gasoline and diesel, to reduce its budget deficit and cover costs related to the earthquake damages from February of this year. The budget deficit last year was 124 billion lira, which exceeded 263 billion lira in the first five months of this year. According to Reuters, the additional fuel tax could lead to an increase in inflation, which has decreased from 85 percent in October of last year to just over 38 percent last month (June). The gasoline tax has risen from 2.52 lira to 7.52 lira per liter, and the diesel tax has increased from 2.05 lira to 7.05 lira. The parliament approved a revenue increase of 1.12 trillion lira, which has recently raised various taxes, including a two percent increase in value-added tax, to 'strengthen the government's treasury.' Reuters calculations indicate that the impact of the fuel tax, along with the increase in value-added tax, will add about 6 lira to the price of gasoline, raising it by more than 20 percent per liter. The lira has lost more than 80 percent of its value since 2018 and has decreased by over 28 percent in 2023. This has led to rising prices across a wide range of goods, from fuel to food in Turkey.