The government of Türkiye has increased the tax rate on gasoline and diesel threefold, in order to finance a TRY1,120bn (€38bn) increase to its 2023 budget. The tax rate for gasoline was increased from TRY2.52/l (€8.5c/l) to TRY7.52/l (€25c/l), while the tax on diesel was raised from TRY2.05/l (€6.9c/l) to TRY7.05/l (€24c/l). The impact of the tax adjustments, coupled with VAT, is expected to add about TRY6/l (€20c/l) to the final pump price.
Türkiye’s 2023 budget increase is notably due to the need for reconstruction after the deadly earthquake that struck the country in February 2023. The additional fuel tax is set to help with a budget deficit that jumped to TRY263.6bn (€8.9bn) in the first five months of 2023, up from TRY124.6bn (€4.2bn) for the same period in 2022. However, the tax hike could also stoke inflation in the country, which had declined to 38% in June 2023 from a 24-year high of 85.5% in October 2022.
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