Turkey adds 7.8 percent tax to alcoholic beverages, further price hikes expected

An additional 7.8 percent special consumption tax has been added for alcoholic beverages in July, automatically in line with Turkey's producer price index in the first half of the year.

The government announced last week that tobacco products would not see any tax hike in the second half of the year over inflationary concerns, but it did not mention alcoholic beverages.

In this vein, the special consumption tax over such products has automatically gone into effect.

As a result, an average increase of 4-4.5 Turkish Liras is expected for a 70 cc bottle of the anise-flavored alcoholic drink rakı.

Turkey makes price hikes in alcohol products and tobacco products twice a year according to their share in the domestic producer price index.

"Cigarettes have a significant share in the inflationary basket. The hikes in cigarette prices last year had an impact on our 2016 inflation rate and created a base effect for this year. In a bid to prevent the inflationary effects from these sources, we have decided not to hike taxes on such products," Finance Minister Naci Ağbal had said last week.

While the share of tobacco products in the inflation basket is 5.87 percent, the share of alcohol products is nearly 0.4 percent.