Turkey to delay planned tax hikes for high earners, luxury homes

ANKARA - Turkey's government has decided to postpone until October planned tax rises for high earners and ultra-luxury housing sales because parliament is about to go on summer recess, two sources familiar with the matter told Reuters.

The Treasury and Finance ministry has drawn up measures to prevent further deterioration in Turkey's budget deficit, which soared 225% in the first five months of the year.

Reuters reported last week the measures included raising taxes on high-income individuals, lowering corporate taxes, and transferring the central bank's 46 billion lira ($8 billion) in legal reserves to the budget.

The proposals by the ministry, which is run by President Tayyip Erdogan's son-in-law Berat Albayrak, were expected to be presented to parliament in a few weeks, after which they could be passed into law.

But the two sources familiar with the matter said that work on the tax regulations for high-income earners and for luxury home sales would not be completed before parliament's recess, which is expected to begin on July 15.

The delayed parts of the package include a new tax band of about 50% for those earning 1 million lira per year, up from 35%, and the introduction of new taxes on luxury housing.

A spokesperson for the ministry was not immediately available to comment on the issue.

The two sources told Reuters the final assessment about the proposal would be made by Erdogan and Albayrak, who are on an official visit to Japan and China until Wednesday.

"There are three proposals on the agenda of the parliament before the vacation. Luxury housing sales and income tax regulation will not be included in the package," one of the sources said.

The other source said: "It was necessary to remove some time frames from the proposal due to (parliament's) tight schedule. Luxury housing and income tax items are postponed to October. Some other items from the proposal may have to be left out as well."