Agricultural input costs have a major impact on food prices in Turkey. In this context, a decrease in agricultural input costs can play a significant role in reducing food inflation. On January 1, 2016, the 18% Value Added Tax (VAT) rate in fertiliser was reduced to 1 percent with the Council of Ministers’ decision numbered 2015/8353. Then, on February 10, 2016, fertiliser was included in the scope of the exception. As these tax reduction decisions exogenously affect fertiliser prices, there is an opportunity to conduct a natural experiment. Using the difference-in-differences (DID) method, this paper examines whether the decisions reduce fertiliser prices. The analysis results provide some hints that consumers received benefits from the tax reduction decisions.
Food price situation in Europe
Food prices in the EU have risen dramatically in 2022 and the first half of 2023. The drivers of this...
