The Turkish government is planning to impose a new tax on credit cards that is designed to fund the defense industry, Agence France-Presse reported.
As cardholders scramble to avoid the new levy, Turkish Finance Minister Mehmet Şimşek defended it as being necessary on Tuesday, citing the ongoing conflicts in the Middle East.
“Our country has no choice but to increase its deterrent power. There’s war in our region right now. We are in a troubled neighborhood,” Şimşek told private broadcaster NTV.
The ruling Justice and Development Party submitted a bill to parliament on Friday stipulating that people with a credit card limit of at least 100,000 liras (close to $3,000) will have to pay an annual 750 lira ($22) in tax from January 2025 to bolster the defense industry.
Indignant Turks, who already face double-digit inflation, reacted by ringing their banks to lower their credit limits.
“The purpose (of the bill) is obvious,” Şimşek argued.
“If we increase our deterrent power, then our ability to protect against fire in the region will increase.”
Turkey’s defense industry has enjoyed a boom in recent years but the minister said the sector needed strengthening further.
Turkey’s defense companies signed contracts in 2023 worth a total of $10.2 billion, according to Haluk Görgün, the head of Turkey’s state Defense Industry Agency (SSB).
The top 10 Turkish defense exporters contributed nearly 80 percent of total export revenue, he said.
Sales of Turkish Baykar drones, used in conflicts from Nagorno-Karabakh to Ukraine, amounted to $1.8 billion.
Official data from the SSB showed that Turkish defense and aviation exports surged 9.8 percent in value in the first eight months of 2024, reaching $3.7 billion.
The ruling party’s credit card bill sparked annoyance among Turks already struggling with high inflation.
Inflation has spiraled over the past two years, peaking at an annual rate of 85.5 percent in October 2022 and 75.45 percent in May 2023.
Official data showed it slowed to 49.4 percent in September.