The government will discontinue its 'sliding scale' fuel tax offset mechanism at the end of 2026, shifting focus toward boosting budget revenues ahead of potential elections in 2027 or early 2028.
Reintroduced in March 2026 to cushion consumers against global oil price shocks following the outbreak of war between Iran and the US and Israel, the mechanism allowed the government to absorb international price increases by cutting tax rates. The government now plans to maximize collection from existing taxes rather than introducing new levies, aiming to solidify its fiscal position.
'In 2026, we applied the sliding scale mechanism and forgave a significant amount of revenue,' Finance Minister Mehmet Şimşek told Bloomberg HT. 'Despite this, we expect a fiscal performance of 3.1% against our 3.5% target.'
Şimşek confirmed that the tax offset for diesel will remain in place only through the end of the year and will not continue into 2027.
'We project an increase in tax revenues for 2027,' he said. 'This will stem from GDP growth, the end of the sliding scale system, and our fight against the informal economy. We have no plans for new indirect tax regulations outside of corporate tax, income tax, and balancing the current account deficit.'
The policy shift coincides with historic highs at fuel pumps across the country, driven by surging international oil prices.
On Sept. 17, fuel prices entered a new phase as two-digit figures gave way to three digits. The price of a liter of diesel exceeded 100 liras, breaking an all-time record.
Despite the surge, Şimşek defended domestic pricing relative to European standards.
'In many European countries, the price of a liter of diesel in Turkish Lira is not below 150 liras,' he argued. 'In our country, it is around 100 liras.'
