ANKARA – Turkish President Recep Tayyip Erdogan has proposed Value added Tax (VAT) reductions on a number of products in order to combat inflation. Erdogan remarked at a press conference following a cabinet meeting said the VAT cuts were largely for basics like sanitary items and medical equipment.

"We have decided to lower the VAT on products like detergent, soap, toilet paper, napkins, and baby diapers from 18 percent to 8 percent," Turkish President Erdogan declared. According to the President, the government would also reduce the financial burden on the building industry by lowering the VAT on landed property to 8 percent.

According to Erdogan, the country will lower VAT to 1 percent on all types of certified seed, seedling, and sapling deliveries, and to 8 percent on select products such as milk collection tanks in the agricultural sector. In February, the country's inflation rate hit 54.4 percent, the highest in over 20 years. Under pressure from price hikes, the government decreased the VAT on basic food products from 8 percent to 1 percent in February.

Turkey's central bank has maintained the benchmark interest rate steady since January, putting an end to an easing cycle that resulted in a currency depreciation in the second half of 2021. Since 2021, the Turkish lira has lost about 60 percent of its value.

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