Turkey Cigarette Tax Would Quicken Inflation

A planned Turkish health tax on cigarettes would have a “very negative” impact on prices, increasing the inflation rate by 1.2 percentage points this year, BGC Partners’ chief economist, Ozgur Altug, said in an e- mailed report today. The tax would increase tobacco prices in Turkey by 24 percent and the likelihood of having double-digit consumer price inflation again by the end of the year would “increase significantly,” Altug said. An additional tax of 1.50 liras ($0.85) per cigarette package is likely to raise 4.1 billion liras ($2.3 billion) in revenue for the government, Sabah newspaper reported today, without saying how it got the information.

Turkish prices in March were 10.4 percent higher than a year earlier. The statistics agency in Ankara will release figures for April tomorrow. The average forecast of six economists on Bloomberg is 10.9 percent, estimates ranging from 10.6 percent to 11.3 percent.