Tax increase for automotive sector restrained, thanks to opinion polls
Many politicians of differing political hues have noted the importance that President Recep Tayyip Erdogan places on opinion polls. We have heard and read from our colleagues or sources familiar with the matter that many political decisions, including the mayoral resignations that recently came to the fore, are made in accordance with opinion polls.
Allow me to share some offthe-record information. As you know, the Finance Ministry had increased motor vehicle tax by a rate that outstripped inflation and reassessment rates. But after the president had lashed out about the situation those tax rates were pulled down. In a sense, consum- ers were offered malaria having been threatened with death.
On the other hand, I have heard something from another source familiar with the ruling Justice and Development Party (AK Party). Its approval rate declined to 35% in the period where motor vehicle tax was increased by fiscal authorities, according to a recent public opinion poll. Staff came together and talked to the president, then the tax was reduced on the request of president and approval rates went back up to 38%.
Despite believing the truth of this information, it is behind the scenes information and I can’t confirm it 100%. Assuming its veracity, I totally agree with regulations being made based on opinion polls as a party strategy. But there is an aspect of it about which I strictly disapprove.
The automotive sector is one of the steam engines of the Turkish economy, like a giant oil tanker. On ships like this a decision takes time to implement properly as the required processes take time to flow.
In a sense, it takes significant time for a ship to go backwards when the captain commands it to reverse and the ship goes forwards for a while. We should think of the automotive sector in this way.
If you want healthy progress on a permanent route, it is important to realize that all taxes and fees include all processes from production to consumption and utilization by calculating accurately. Mid-decisions spoil the route of the ship. The automotive sector deserves long-term planning with its high registered employment, relatively high added value and the high foreign exchange inflow it pumps into the economy.
You can’t just call for a change to motor vehicle tax. This is a tax decision that affects end users’ decisions, and even a sales fluctuation of 1% or 2% may lead to a butterfly effect that would change import-production and investment balances.
Therefore, constructive plans should be immediately embraced for the life-blood sectors of a country’s economy, with the automotive sector in first place. It’s too late, but it’s never too late to mend – unless, that is, the coming erosion influences approval rates in a negative way.