MOSFED Head Calls for Strategic Tax Adjustment Amid Rate Cuts

Ahmet Güleç, Chairman of the Machinery and Accessories Manufacturers Association (MOSFED), emphasized that controlling inflation requires more than just monetary policy tools, arguing that withholding tax on deposits must be lowered gradually and in a maturity-sensitive manner as the interest rate cut cycle begins.

Synchronizing Monetary and Fiscal Policies: Beyond Interest Rates

Güleç pointed out that inflation is not solely driven by aggregate demand but is influenced by multiple variables including expectations, exchange rates, and production costs. He stressed that permanent disinflation requires the synchronization of monetary and fiscal policies.

■Inflation dynamics cannot be controlled by interest rates alone

■Production costs and financing conditions directly impact pricing

■Fiscal policy must support monetary policy measures

Strategic Shift in Withholding Tax to Extend TL Maturity

Highlighting that deposit withholding tax is not a cost for banks but a tax levied on savers' income, Güleç stated that reducing this tax would increase the appeal of TL deposits. This move is expected to improve banks' funding conditions and create downward pressure on commercial loan interest rates.

■Tax reduction increases the net return for savers

■Increases the volume and maturity of TL deposits

■Reduces funding pressure on banks

From Production Line to Export Market: Reducing Financing Costs

Stating that financing costs are a critical competitive factor for the real sector, Güleç noted that lowering credit costs is not just a growth strategy but also an integral part of the disinflation strategy. Reducing working capital costs will directly reflect on production costs and consequently boost the exporter's competitiveness.

■Ensures investments are financed under more favorable conditions

■Lowers production costs to contribute to price stability

■Enhances the exporter's competitiveness in global markets

From my perspective as Ufuk Tepe, looking at the automotive and heavy industry sectors, this proposal addresses a critical bottleneck. High financing costs currently stifle capital expenditures for EV battery technologies and modern assembly lines. Reducing deposit withholding tax can lower funding costs in the banking system, thereby revitalizing industrial investment drives and powering production-led growth that contributes to closing the current account deficit.