Prime Minister
Tayyip Erdogan disclosed the details of the economic stimulus package at a
political rally in the central province of Eskisehir. The size of the new
package is expected to be $3.2 billion, a deputy prime minister earlier said on
Friday.
Erdogan said the tax cuts will be
effective for three months and the government will provide financial support of
75 million TL to small and medium-sized enterprises.
The Private Consumption Tax rates
on automotive and white goods will be lowered and the Value Added Tax rates on
housing will be cut to 8 percent, Erdogan added.
REACTIONS: NOT
SUFFICIENT
Sector
representatives said however the measures were the product of good intentions,
but fall well short of providing permanent solutions to the ongoing
problems.
“We have been
saying this for months, and just prior to the local elections, a 3-month cut in
announced. These measures were a necessity from the start, and I don’t think
that this will be a solution for the future,” Murat Onay, head of the White
Goods Provider Organization, told ntvmsnbc.com.
The amount of
sales will probably increase by 10 percent during the 3-month period, but this
will not be a final solution, he added.
Real estate
sector measures were also criticized since the announced VAT cut was only
applicable to properties over 150 square meters.
“As an attempt,
it is good, but this is not a big surprise. I don’t think that the VAT cut will
affect overall demand at the moment,” Nizameddin Asa, deputy chairman of the
Chamber of Real Estate Agents, told hurriyet.com.tr.
Turkey
currently imposes 1 percent VAT on property less than 150 square meters, which
makes up 95 percent of Turkey’s total real estate stock, and
18 percent for homes over 150 square meters.
The automotive
sector however viewed the latest measures more positively. Ali Pandir, CEO of
Tofas, a joint venture between Italy's Fiat and local group Koc, said the cut in
private consumption tax was a measure would help reduce stocks in
Turkey’s automotive sector. “It will
be beneficial even it provides revival in the markets for three months,” he
added.
The automotive
industry, one of the leading sectors in Turkey, contracted sharply as the
global recession led to a decline in both foreign and domestic demand. According
to the recent figures, production in the automotive manufacturing industry in
Turkey declined 63 percent in the
first two months of 2009 compared to the same period of last
year.
