(Adds corporation tax, Simsek tweet)
By Nevzat Devranoglu
ANKARA, Oct 13 (Reuters) - A Turkish parliamentary commission agreed on Friday to extend a planned 2 percentage point tax rise to all corporations instead of just financial institutions.
Friday’s proposal was one of several changes to tax plans which aim to address a public backlash against proposals put forward last month while still allowing expenditure to grow.
The government is seeking more revenues for military spending.
The commission accepted a proposal from President Tayyip Erdogan to trim a planned hike in motor vehicle tax to 15-25 percent for most cars, depending on engine size, from the 40 percent put forward in a draft law.
Agreement was also reached to drop a proposed increase in one income tax bracket to 30 percent from 27 percent as of 2018.
But offsetting those concessions, a separate additional tax on cars, linked to their value, will come into effect next year.
Owners of cars valued between 40,000 to 70,000 Turkish lira ($11,000-$19,000) will pay an additional 10 percent, while cars valued above that will face a 20 percent increase in motor vehicle tax, Finance Minister Naci Agbal said.
The rise in corporation tax, to 22 percent from 20 percent, will run for the next three years, a copy of the proposal handed to parliament showed on Friday.
The proposals still need to be passed by parliament, but are unlikely to face serious opposition in a chamber where Erdogan’s AK Party holds a majority of seats.
Earlier on Friday, Deputy Prime Minister Mehmet Simsek said on Twitter that Turkey would maintain its medium-term economic programme targets and that the loss of revenue from the reduced motor vehicle tax hike would be recouped elsewhere.
“Medium term program and budget targets will remain unchanged. We will take measures to compensate for the changes in tax hikes,” Simsek wrote on Twitter.
The proposed tax increases aim to help cover a rise in military spending. Simsek said last week that an additional $5 billion will be spent to buy new weapons next year relying on tax revenues, not borrowing.
$1 = 3.6298 liras Additional reporting by Ece Toksabay, Ezgi Erkoyun and Ali Kucukgocmen; Writing by Dominic Evans