Turkey proposes bill to expand presidential control over vehicle taxes

Turkey’s ruling Justice and Development Party (AK Party) submitted a draft bill to parliament on Monday that proposes significant changes to the country’s tax framework, particularly targeting special consumption tax (SCT) regulations for motor vehicles. 

The draft legislation aims to limit certain tax exemptions and broaden presidential authority over taxation criteria.

Key Changes in the Proposed Legislation

According to the draft law, the AK Party seeks to grant President Recep Tayyip Erdoğan greater discretionary power to determine and modify special consumption tax (ÖTV) rates based on specific criteria such as:

• Engine size (cylinder volume)
• Electric range (for hybrid and electric vehicles)
• Battery capacity

This would allow the president to adjust tax rates without returning to parliament, potentially enabling real-time fiscal responses to developments in the automotive sector, especially regarding environmental performance and technological innovation.

The government argues that the measure is designed to modernize Turkey’s tax system in line with current market realities and encourage the adoption of cleaner vehicle technologies, such as electric and hybrid cars. It also forms part of broader efforts to streamline tax exemptions and increase public revenue in a challenging economic climate.

The Special Consumption Tax is a major source of fiscal income for Turkey, applied not only to vehicles but also to products such as fuel, tobacco, alcohol, and luxury goods. Car buyers in Turkey face some of the highest SCT rates globally, often resulting in final vehicle prices being two to three times the base value.

Reactions and Concerns

While supporters see the bill as a necessary reform that gives the executive flexibility to promote sustainability and boost budget stability, critics warn of excessive concentration of fiscal power in the hands of the president. They argue that tax policy should remain under parliamentary oversight to ensure transparency, accountability, and predictability.

Industry experts also raise concerns about potential volatility in the auto market, with sudden tax changes possibly impacting consumer confidence, production planning, and pricing strategies.

Parliamentary committees are expected to review the bill in the coming weeks, with debate and possible amendments anticipated before a final vote.

If passed, the legislation could significantly reshape how motor vehicle taxes are structured and administered in Turkey — and further consolidate executive control over economic policymaking.