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How Ankara is using taxes to target boozers

Staggering tax hikes on alcoholic beverages have made Turkey’s national drink, raki, a luxury beyond the reach of many ordinary Turks.
Raki bottles are displayed at a restaurant in Ankara September 27, 2011. Turkey is providing rich opportunities for merger specialists trawling for the next big deal, as the country's booming economy and improving corporate governance partially insulate it from a slowing global M&A market. The most popular M&A sectors have been energy, power generation and finance. But the biggest splash so far this year was made by the world's biggest spirits company, Diageo, which agreed in February to buy Turkish raki an

Turkey’s consumer inflation rate hit 8.5% in 2016, surpassing the government’s 5% target. A number of factors contributed to this outcome, including the dollar’s 20% rise against the Turkish lira. Such high inflation also has to do with alcoholic beverages and tobacco, which figure in the “pleasure-giving substances” category. The price increase in this category last year was nearly 32%, or 276% higher than overall consumer inflation. The category accounts for less than 5% of the total consumer basket, and although the exorbitant price increases likely only concern a limited number of people, in Turkey’s prevailing political climate, they speak of growing discrimination and intolerance against Turks who reject the conservative lifestyle the government promotes.

Statistics show that last year’s price increase for raki, the aniseed-flavored national booze, exceeded 25%. The increase for beer, the alcoholic beverage consumed most in terms of quantity, was 26%, and the increase for wine was 13%. Soaring prices for alcohol, however, have not been limited to 2016. Since the Justice and Development Party (AKP) came to power in November 2002, Turkey has seen stark price hikes in tobacco and alcoholic beverages. According to figures by the Turkish Statistical Institute, overall consumer prices increased 181% from 2003 to 2016, while the price of raki rose 500%. Yes, that's right — 500%. Beer and wine prices soared 423% and 235%, respectively, during the same period.

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