In the midst of an economic crisis, Turkey wants to multiply its foreign departure fees by ten

The Turkish Ministry of Finance has launched talks to drastically increase foreign departure fees to boost public revenues in the context of record inflation.

Finding capital to boost its ailing economy: Turkey plans to launch a series of taxes to bail out the coffers. According to information obtained by the online media Ekonomim, one of the key elements of the plan to increase tax revenues, which will be discussed by the Turkish Parliament in September, concerns the increase in foreign departure fees.

Turkish citizens flying to international destinations currently have to pay 150 Turkish lira (4.6 dollars) in departure taxes, per person. However, the government’s proposed tax reform envisages a drastic increase of between 1,000 and 1,750 lira (between 31 and 54 dollars). The foreign departure fee, which was 15 lira ($0.50) in 2018, had already been raised to 50 lira (1.54 dollars) in July 2019 before reaching 150 lira in March 2022.

If the tax is adopted at 1,750 lira, this would represent a tenfold increase.

40 million dollars in revenue

A total of 1.3 billion lira (almost 40 million dollars) has been collected from the 2023 departure tax in Turkey. In the January-April 2024 period, 427 million lira (13 million dollars) were generated. Part of the outbound fees are transferred to the Social Housing Development Administration (TOKI), run by the Erdoğan government.

Turkish citizens with a residence permit abroad at the time of departure, employees of companies transporting goods and passengers for commercial purposes in road, sea, air, and rail vehicles, and children under the age of 7 are currently exempt from the fee.

On May 1, Germany decided to increase its taxes on international flights by 19%, to between 16 and 71 euros (17 and 76 dollars) per passenger, depending on the route. The decision was strongly criticized by the International Air Transport Association (IATA), which explained that the increase would make Germany less competitive in key economic areas such as exports, tourism, and employment.

“At a time when Germany’s economic performance is anemic, weakening its competitiveness by raising aviation taxes is political folly. The government should be prioritizing measures to improve Germany’s competitive position and encourage trade and travel. Instead, it has opted for a short-term cash grab that can only harm the long-term growth of the economy,” said IATA Director General Willie Walsh in a statement.

The German departure tax applies to all travelers, unlike Turkey which, like Iran, only taxes its citizens. In Germany, France, and the UK, departure taxes are passed on directly to all passengers at the price of their ticket. In Turkey, special counters are set up at airports to enable Turkish citizens to pay their departure tax. Other countries, such as Spain, Portugal, Switzerland, and Ireland, have no international departure tax at all.

A tax on breathing

The left-wing Cumhuriyet Halk Partisi (CHP), Turkey’s main opposition party, has called for a complete abolition of the foreign departure tax. Speaking on the subject, Aykut Kaya, CHP deputy in Antalya, said on social network X: “The cost of travel has already risen. Will this austerity continue to be imposed on citizens? If things continue as they are, creative new taxes such as the ‘breath tax’ for households could be part of the tax package prepared by our Treasury and Finance Minister.”

The Turkish administration, which is notably preparing to abolish numerous tax exemptions in order to boost public revenues, had recently debated a plan to tax financial transactions and cryptocurrencies, which was finally abandoned on June 13. According to the Turkish media outlet Sozcu, a series of new taxes are in the pipeline, including those on motorcycle couriers working on an individual basis, and a request for advance tax on professions such as lawyers, doctors, and architects.

Turkey’s official inflation rate hit a record 75% last month, according to data released by the Turkish Statistics Institute, which says the hardest-hit areas include education, housing and catering

“The worst is behind us,” said Finance Minister Mehmet Şimşek in a message posted on social network X after the data was announced. “We are entering the disinflation process. The permanent decline in inflation will begin in June,” he said, adding that the government would cut spending to help control prices.

One of the highest inflation rates in the world

The effort to control inflation through higher interest rates represents a radical shift on the part of President Recep Tayyip Erdoğan, who had previously instructed the central bank to keep rates low for years in order to stimulate the economy.

The central bank has maintained its benchmark interest rate at the last two meetings and is testing other measures to curb lending growth, saying after a rate meeting last month that higher borrowing costs would have a “delayed effect” on inflation, as reported by the Financial Times. The bank expects annual consumer price inflation to slow to 38% by the end of the year.

But higher interest rates have not deterred Turkish consumers from spending rather than saving. GDP data released by the Turkish Statistics Institute showed that household consumption jumped by 7.3% in the first quarter, fuelling a 5.7% expansion of the country’s economy.

Turkey now has one of the highest inflation rates in the world, ahead of Zimbabwe, Argentina, Sudan, and Venezuela, according to data from the International Monetary Fund (IMF).