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Türkiye is set for its record one-time gasoline price increase on Oct. 1, as the government's fuel-tax buffer will be fully phased out, drastically increasing the excise duty.
The special consumption tax (SCT) on gasoline is currently ₺4.43 per liter and will rise to ₺14.83, adding ₺10.40 to the tax. The resulting value-added tax (KDV) increase will add another ₺2.08, bringing the total expected increase to ₺12.48 ($0.25) per liter.
As of Sept. 25, gasoline costs around ₺80.40 per liter on Istanbul’s European side. If there are no further increases or discounts before Oct. 1, the planned hike is expected to push the price above ₺90 per liter.
The government reintroduced the mechanism, known as the sliding-scale fuel tax system, in March after discontinuing it in February 2022 to cushion consumers from fuel-price increases amid the U.S.-Iran war and the Strait of Hormuz crisis. Under the system, changes in international oil prices and the exchange rate are partly offset through adjustments to the special consumption tax (SCT) on fuel.
When refinery prices rise, the SCT is reduced by up to 75% of the increase, limiting the amount passed on to consumers at the pump. When prices fall, the SCT is increased by up to 75% of the decline, allowing the government to recoup part of the tax reduction.
Treasury and Finance Minister Mehmet Simsek said in May that the system cost the government ₺90 billion in its first two months and could reach around ₺600 billion ($12.3 billion) for the full year if the trend continued.
The government announced the system’s gradual phase-out on July 3, reducing the share of refinery-price increases offset through SCT cuts from 50% through July 31 to 25% between Aug. 1 and Sept. 30, before ending the mechanism entirely on Oct. 1.
Sector officials told ANKA News Agency that the government could still introduce a new decision similar to the phased approach used for diesel, although no such move has been announced so far.
In August, the government ended the system for diesel and instead temporarily removed the SCT from pump prices, with the tax set to return through monthly ₺3 increases until the end of the year. The SCT therefore rises by ₺3 in September, ₺6 in October, ₺9 in November, and ₺12 in December.
SCT revenues from petroleum products declined nearly 60% during the March-August period from a year earlier, a ₺148.6 billion ($3 billion) drop, according to Treasury data. Since the start of the war on Feb. 28, gasoline prices in Türkiye have risen more than 40% despite the tax relief, while diesel prices have climbed 54.9%.
Fuel prices at the pump are determined by international refined-product prices, refining margins and the Turkish lira-dollar exchange rate, along with taxes and other costs. The final price includes the state’s revenue share, distributor and dealer margins, transportation costs, SCT and value-added tax (VAT).
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