Tax raise to boost Turkey's defense

Turkey's new tax measures aim to boost defense spending amid increased geopolitical risks, the finance minister said on Thursday.

"The tax raises will be transferred directly to the defense industry fund as the fund is not a part of central government budget," Naci Ağbal said in a speech at the Istanbul Financial Summit.

The government on Wednesday announced new tax measures which aim to add 28 billion Turkish liras ($8 billion) to the revenue budget in 2018, in line with the Medium Term Program (MTP). The program targets an annual growth rate of 5.5 percent for 2018-2020.

According to the measures, the government will allocate an additional 8 billion Turkish liras ($2.32 billion) of its existing revenues towards defense spending, in order to increase the country's military power in the region.

Ağbal said that the defense industry's share in income and corporate taxes will be increased to 6 percent from the current level of 3.5 percent through the new measure.

"We are working on a legal regulation which will provide basis for allocating part of motor vehicle taxes directly to the fund," Ağbal added.