Is the cost of living (food, rent, price of a coffee at a bar ...) in lira going up at the same pace? Or is the inflation only felt in imported goods suchs computers, gasoline ...
Tech workers are mostly in good spot, (great if working remote). However, in Turkey, minimum wage is almost average wage. I feel very bad for most people, and try to give anyway I can.
Car prices are ridicolous. I could almost buy a Tesla Plaid in US at the price of a BMW 320 here. But it's due to high taxes. These taxes were introduced in the '99 earthquake, meant to be temporary. But those taxes are everywhere, named like "Luxury Consumption Tax".
Are those taxes effectively targeting products that are imported?
It's classic trick to improve the trade deficit.. I would guess that getting rid of them would only further crags the currency.
Well, that also depends on how you define luxuries :)
I personally don't mind taxes, but consumption taxes, even on "luxury items" are generally likely to be regressive in nature. So maybe don't use them...
I'm not sure. I was just looking for some points of comparison, and as far as I can gather, tampon tax (the standout example for regressive luxury taxation) wasn't actually a luxury tax, but rather a tax on 'unnecessary' items. Which is - ech - but, you know, it's not an extra tax.
I think explicit taxes on higher-price items within categories (so like, expensive cars) would be kinda nice, because it avoids all of the fiddly questions over what is and isn't an luxury item.
It’s very easy to wipe out an entire market by over taxing it, and lose not only the luxury tax, but also all the normal taxation. Not to mention all the black and grey market activities you incentivise.
Nope, pretty much anything that is not deemed basic biological need has some amount of Luxury Consumption Tax, or ÖTV.
Alcohol, electronics, cars, fuel ,communication services, communication devices, cola and similar drinks, cosmetic, newspapers etc.
The rate and the items will change all the time. Especially for the fuel, it's used as a buffer to keep gas prices stable as the Turkish lira and oil prices fluctuate. Currently the luxury tax on gas and diesel is 0 because they gradually reduced it to keep the price somewhat stable as the oil prices soar and the Turkish lira falls. When the oil prices were low and the lira was strong, Turkey had the most expensive fuel prices in the world. Currently, it's the cheapest in Europe.
This also means that exported goods are effectively cheaper for international buyers, so export volume goes up.
What usually happens is that since oil is denominated in USD, the price of fuel and transportation rises when a currency weakens and that increases the price of locally produced goods as well.
That's Erdogan's theory. However in reality nothing stays cheap because anything Turkey produces has large component of imports, be it energy, parts or machinery etc. because the country is not a petrostate.
The only thing that can stay cheap is the labour but that labour can stay cheap only if it sees huge drop in life quality since the stuff the people consume(petrol, cars, electronics etc.) see huge price increases.
You simply can't keep the wedge of a worker at 5000 when the iPhone prices increase from 7000 to 11000, car prices jump from 200K to 300K and gas from 6 to 9.
This is not true for Turkish Lira because EVERYTHING is dependent on foreign currencies at some point. For example local agricultural goods shouldn't be affected, but all the machines in production line are imported, all their servicing equipment are imported. If one simply goes unofficial (e.g. Finding someone to service their machines totally in Turkey), even iron is based on foreign currencies as almost everything is either imported or owned by a foreign company (as the government sold everything to non-Turkish entities). Fuel is also imported and is directly correlated with foreign currencies. At the end of the day, everything, even local goods, is tied to foreign currencies.
It provides advantage as long as the currency is in that deprecated state. Basically the same work will cost less in the depreciated currency. This causes demand for that work, which causes appreciation of the currency.
Why not? Unless they’re incapable of being exported