Tax increase for automotive sector restrained, thanks to opinion polls

Dünya Executive - - COMMENTARY - Gultek n Kara Columnist

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.

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