Important move from the Treasury as fuel price hike expectations rise! 'Eşel mobil' system on the agenda
In order to limit the impact of rising oil prices due to ongoing conflicts in the Middle East on domestic fuel prices, the Ministry of Treasury and Finance has begun working again on the 'eşel mobil' (sliding scale) system, which involves tax concessions.
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The recent volatility in global oil markets has caused the price of Brent crude to exceed the 80-dollar threshold due to the impact of the conflicts that have broken out in Iran. Rising oil costs have begun to reflect as significant price hikes for gasoline and diesel in Turkey as well. The economic administration is focusing on alternative solutions to protect citizens.
Studies being conducted at the Ministry of Treasury and Finance are evaluating the reactivation of the 'eşel mobil' system, which was implemented in previous years and reduces the tax burden on retail prices. Under this system, when international oil prices rise, the Special Consumption Tax (ÖTV) rates applied to fuel are reduced, preventing price hikes from being passed on to the consumer.
Officials state that the ministry is currently analyzing the system's impact on the budget and potential tax revenue losses. While the evaluation process is expected to be completed and a decision reached within a few days, the Ministry has not made an official statement on the matter.
Due to this sudden rise in energy prices, diesel prices were projected to increase by 6 lira and 60 kuruş overnight. A new intervention to prevent such hikes from being directly reflected to the consumer is not seen as a surprise.
ŞİMŞEK: WE ARE WORKING TO LIMIT THE IMPACT
Minister of Treasury and Finance Mehmet Şimşek gave the first signals of a possible intervention in a statement on his social media account, saying, "We are working to limit the inflationary impact of oil price increases triggered by geopolitical developments."
WHAT IS THE 'EŞEL MOBİL' SYSTEM?
The 'eşel mobil' system was first implemented in Turkey in 2018 in the face of rapid increases in exchange rates and global oil prices, aiming to protect the consumer from high prices. With the reactivation of this system, which was terminated in 2022, the state aims to balance price increases by giving up a portion of its tax revenue.
In the formation of fuel prices at the pump in Turkey, the refinery exit price, Special Consumption Tax (ÖTV), Value Added Tax (KDV), and distribution profit margin are primarily taken into account. In the current situation, every increase in international oil prices is reflected as a price hike to the end user. If the 'eşel mobil' mechanism is implemented again, at least a portion of these hikes may not reach the consumer as the state absorbs them.