* Photo: Özgür Kocaeli
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According to a decision signed by President and ruling Justice and Development Party (AKP) Chair Recep Tayyip Erdoğan and published in the Official Gazette earlier today (December 22), the cuts expected in fuel oil prices will be added to the Special Consumption Tax (ÖTV).
The fuel oil prices will not be reduced until the tax base is reached. The drops in prices due to falling exchange rates will not affect the money paid by citizens to buy fuel oil; it will be levied on them as the ÖTV.
Only reduction in LPG prices
After President Erdoğan and the Ministry of Treasury and Finance unveiled the "foreign exchange-protected lira deposit" system, the Turkish Lira (TRY) has gained ground against foreign currencies, which have lost value by almost 35 percent against the TRY in two days.
Following this drop, the prices of gasoline and diesel were expected to be cut by 2 liras and that of the Liquid Petroleum Gas (LPG) by 1.10 lira. The Special Consumption Tax (ÖTV) margin is 2.53 lira for gasoline, 2.05 lira for diesel and 1 lira for the LPG. That being the case, the price of the LPG will be reduced by 0.10 lira as a result of the drops in exchange rates.
The prices of both gasoline and diesel are currently over 11 Turkish Lira in Turkey, while that of the LPG is around 9 Turkish Lira.
About the Sliding Scale System
This system is used in order to prevent the changes in the foreign exchange rates from affecting the fuel oil prices in a floating exchange rate regime. The increases to be caused by increasing exchange rates do not affect the fuel oil prices as they are cut from the ÖTV.
Due to the system that was introduced in Turkey in 2019, the ÖTV rate on fuel oil products were zeroed following price increases. (HA/SD)
