Turkish tax cuts on appliances should continue to avoid contraction - group
Turkey’s government has cut taxes on home appliances to stimulate demand, but the industry says the reductions should continue throughout 2019 to avoid a contraction.
Manufacturers expect a decline in sales of 15 percent in 2019 should the government halt the cuts, introduced in November and due to conclude at the end of March, when local elections will take place, Sözcü newspaper reported citing the White Goods Manufacturers’ Association of Turkey (TÜRKBESD).
Turkey’s ruling Justice and Development Party (AKP) has lowered sales taxes on a variety of goods including washing machines, refrigerators and cars to help reverse an economic slump that saw the economy contract by 1.1 percent quarterly in the three months to September. Many investors looking to put money in Turkey are expecting the incentives to end following the election.
Even with the tax reductions, sales of refrigerators, washing machines, dishwashers and ovens shrank an annual 15 percent to 367,613 units in December, according to TÜRKBESD. That contraction almost matched a 17 percent fall in the year as a whole.
Exports are providing some relief to the industry, however. Sales abroad rose 6 percent during 2018, including an 8 percent increase in December to 1.6 million units. Export performance may soften the blow for manufacturers should the tax reductions conclude as scheduled.