All the measures necessary for 2014 have been taken thus the government does not currently plan new tax hikes, finance minister Mehmet Simsek said.
Those measures aim to reduce imports, especially auto and mobile phone imports, Simsek explained. Turkey has a large current account deficit, hovering around 7% of its GDP which makes it vulnerable to sudden reversal of capital inflows. TRY has been under pressure recently because of the political uncertainty and its large current account deficit.
The government raised the Special Consumption Tax (SCT) on new cars, tobacco products, alcohol and cellular phones. TRY 2.75bn (EUR 926mn) in revenue from the SCT hike is expected, and this revenue had been already projected in the 2014 budget, government sources told Reuters earlier this month.
The central bank calculates that the tax hikes will add around 0.5% to the headline inflation. Analysts however argue that the tax adjustments may push up inflation as much as 1%.
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