Turkey's Automotive Producers' Society (OSD) is complaining that it has not been consulted over government plans to raise VAT and purchase tax on vehicles.
The measures are meant to fine-tune the economy in line with the suggestions of the International Monetary Fund (IMF). The sequel to increasing the 3 percent cut in the resource employment support fund to 8 percent will be to raise car taxes.
The authorities are likely to introduce a decree to bring up the value-added tax on cars from 25 to 30-35 percent, and to introduce a higher tax for the purchase of additional vehicles - projected to go up from 18 to 25 percent for most cars. In the meantime, business circles have stated that the decisions have not yet been conveyed to them.
Ali Ihsan Ilkbahar, chairman of the Automotive Producers' Society (OSD), told the Anatolian news agency that while they had "understanding" for measures bringing the automotive sector in line with macroeconomic trends, it was regrettable that they had not been consulted.
"I do not recall any government that made decisions after consulting us.
Governments come and go, but I have been in this position for 11 years, while some of my colleagues were in the sector for 10-15 years. The government does not think of asking our opinion in making a decision about the sector," Ilkbahar said.
He warned the government against the rise in automobile imports and argued that domestic producers were treated like "stepchildren" while measures were taken to encourage exports. He noted that "little known cars, some of which come from India" were being imported and said, "at least service stations should be opened" if the trend continued.
Ilkbahar emphasized that the automotive sector was known for its volatility and said: "We exceeded the sales figures for 1993 after only seven years. Car sales during the first eight months of this year reached 269,000 as compared to 247,000 in 1993. The automotive sector is very sensitive to external developments, which is one more reason why the government should be careful about the implications of macro-economic decisions. If the demand for cars falls faster than projected, the new practice should be re-evaluated. The automotive sector should not be paralyzed in trying to reach macro-economic goals." Yuksel Mermer, chairman of the Automotive Exporters' Association, also talking with the Anatolian news agency, stated that the measures were "not logical." "There is no equivalent in the world of the 48-80 percent car tax in Turkey. We should remember that more automobile sales mean higher taxes. We should try to boost other sectors, instead of putting obstacles in the way of development through measures such as cutting domestic demand. While we support any decision which is to the advantage of Turkey, we don't believe that increasing car taxes falls in this category," he said. – (Albawaba-MEBG)
© 2000 Mena Report (www.menareport.com)
