Turkey plans to raise the rate of value added tax (VAT) by a percentage point on a range of household staples and luxury items, a government official told Reuters on Monday, May 7.
The move to increase revenue comes as Turkey faces a growing domestic debt burden after bailing out state bank losses amounting to around $20 billion. It also comes as the economy contracts rapidly after two punishing financial crises.
The official said a decree had been sent for cabinet approval that would raise VAT on household staples to 18 percent from 17 percent. VAT on "luxury" goods, such as white goods, would rise to 26 percent from 25 percent.
Turkey has all but secured $10 billion in additional IMF and World Bank lending to help deal with its crisis, but has to pull the economy out of contraction expected to be at least three percent in 2001. — (Reuters, Ankara)
© Reuters 2001
© 2001 Mena Report (www.menareport.com)