Recommendations to the Ministry of Treasury and Finance on diesel and petrol excise after the August 2026 regime switch
ABSTRACT
Türkiye met the 2026 energy price shock with two fuel-excise designs. The sliding-scale (eşel mobil) system of 5 March offset 75% of international price and exchange-rate increases from the special consumption tax (ÖTV). On 13 August diesel left the system: its ÖTV was set to zero and tied to a schedule rising by 3 TL a month from September. This brief, addressed to the Ministry of Treasury and Finance, argues that the sliding scale’s buffer was capped by the tax amount and was narrowest for diesel, and that the schedule adds a fixed tax step on top of the shock, shifting the burden of price stability to the central bank. Three recommendations cover the remaining steps, buffer transparency and joint fiscal–monetary communication.
1. The problem: a buffer capped by the tax it spends
The sliding scale is an automatic stabiliser in which a specific excise moves against international prices. Its binding limit is that the tax cannot fall below zero, so once a price rise has consumed the ÖTV amount, every further increase reaches the pump. “Buffer capacity” here means that ÖTV amount.
Presidential Decree 10995 of 5 March 2026 deducted 75% of any increase in international prices or the exchange rate from ÖTV, raised ÖTV at the same rate when prices fell, capped ÖTV at its 2 March 2026 level, and covered petrol, diesel, LPG, butane and propane (PwC Türkiye, 2026a). On 5–6 March the ÖTV amounts were 12.5287 TL per litre for 95-octane petrol, 6.1166 TL per litre for diesel and 10.6834 TL per kilogram for LPG (PwC Türkiye, 2026b). Diesel’s buffer was therefore about 49% of petrol’s. At a 75% absorption rate, the diesel buffer is exhausted by a pre-tax price rise of about 8.2 TL and the petrol buffer by about 16.7 TL (author’s calculation). Because the sources do not itemise ÖTV changes after March, these thresholds are upper bounds. The narrowest buffer sat on the fuel that later came under the heaviest pressure.
On 13 August diesel ÖTV was set to zero, with the amount scheduled to reach 3 TL in September, 6 TL in October, 9 TL in November, 12 TL in December and 13.9006 TL on 1 January 2027; Minister of Treasury and Finance Şimşek said the aim was to limit the effect of high diesel price increases on consumers and producers (GZT, 2026). Diesel left the sliding scale, which was to continue for petrol and LPG until 30 September 2026 (QNB Invest Araştırma, 2026). The January 2027 amount is more than twice the March amount and lies outside the 2 March cap. The schedule runs whether international prices rise or fall, converting the tax from a shock absorber into a fixed revenue path.
The September evidence shows the consequence. On Istanbul’s European side diesel cost 77.48 TL per litre on 30 August, with an ÖTV-driven rise of about 3.60 TL expected on 1 September (Habertürk, 2026); on 1 September it was 80.93–81.07 TL (Uzmanpara, 2026a), so the first step passed through in full. By 22 September diesel had reached 96.30 TL, a level recorded after a 4.09 TL cut on 19 September (Hisse.net, 2026). Between 30 August and 22 September diesel rose 24.3% and petrol 8.2%, from 74.34 TL to 80.40 TL (Habertürk, 2026; Hisse.net, 2026). Net of the 3.60 TL step, the diesel rise is about 19.6%, more than twice petrol’s. Two sources could explain the gap, faster growth in international diesel prices than in crude and continued absorption by the sliding scale for petrol, but the sources do not give petrol’s September ÖTV amounts, so the shares cannot be separated.
A counterfactual bounds the design’s responsibility. Had diesel stayed on the sliding scale, absorbing 75% of the roughly 15.3 TL rise between 1 and 22 September would have required about 11.5 TL of ÖTV room, about twice the March diesel amount. The fall from 80.07 TL on 13 August (GZT, 2026) to 77.48 TL on 30 August is consistent with the zeroed ÖTV having been smaller than that, though without the intervening international price change this is a signal, not proof. The size of the September jump was set outside tax design; the design closed an already narrow buffer and added a monthly step on top.
Three shortcomings follow: the steps stack on any further shock; no public series shows the remaining buffer by fuel; and the fiscal path carries no stated inflation effect, so the central bank absorbs it unannounced. August data already show the channel: transport prices rose 4.82% month on month and 35.08% year on year (Dünya Gazetesi, 2026a). Kilian and Zhou (2022) find that rising US gasoline prices from 2020 lifted household inflation expectations, and Çatık and Önder (2011) find that the inflationary effect of oil prices in Türkiye depends on the inflation regime. In a high-inflation regime where households expect 45.6% inflation (Dünya Gazetesi, 2026c), pump prices are an expectations instrument, whatever their revenue logic.
2. Recommendation 1: Make the remaining diesel steps price-contingent
The Ministry should keep the 13.9006 TL end-point and attach a deferral rule to the monthly steps: a step is postponed by one month when the pre-tax diesel price rose by more than a published amount in the preceding month, and resumes when it falls. Sequencing: adopt the rule by the November step. Trade-off: revenue arrives later. The schedule matches in timing and direction the 2027–2029 Medium-Term Programme’s deficit targets of 3.5% of GDP in 2027 and 2.8% in 2029 (Dünya Gazetesi, 2026b), but the sources give no fuel-ÖTV revenue estimate, so the fiscal cost must be published with the rule. Indicator: pump-price changes on step dates stay near the 3.60 TL first-step effect when international prices are flat, and no step coincides with a month of sharp pre-tax increases.
3. Recommendation 2: Publish the remaining buffer by fuel
The Ministry should publish, every two weeks, the ÖTV amount per fuel and the absorption room it implies (ÖTV divided by 0.75). Sequencing: start with the decision on petrol and LPG after 30 September, whose status this brief could not verify. Before any move of petrol off the sliding scale, its residual buffer should be published against the March threshold of about 16.7 TL. Trade-off: publishing room may create an expectation that it will be used, narrowing discretion. Indicator: an official series that lets analysts decompose the petrol–diesel gap into international prices and tax, which is currently impossible.
4. Recommendation 3: Announce the inflation contribution of the schedule jointly with the central bank
Scheduled steps are administered price changes known in advance. If the Ministry publishes their estimated contribution to CPI and the central bank states that it treats them as level effects, the steps stop carrying information about future inflation and households receive no new signal from each one. Sequencing: publish before the central bank’s 22 October Monetary Policy Committee meeting (Uzmanpara, 2026c), using the 5 October CPI release to calibrate the first step. Trade-off: a joint statement ties fiscal credibility to the central bank’s reading of the data. Indicator: household inflation expectations, now 45.6%, do not rise in the months the steps take effect.
5. Implementation risks
A deferral rule can become permanent postponement; the fixed end-point and a one-quarter cap on cumulative deferral contain that risk, and resumption must be as mechanical as deferral because suspension is politically easier. If the sliding scale lapses for petrol after 30 September, both main fuels enter 2027 with no tax buffer. An alternative reading treats the schedule as a deliberate fiscal anchor after months of foregone revenue; the recommendations keep its end-point and change only timing and disclosure.
6. Outlook: Türkiye, Saudi Arabia and the World
For Türkiye, diesel ÖTV rises to 6 TL in October, 9 TL in November and 12 TL in December (GZT, 2026). With the first step passing through at about 3.60 TL, diesel will rise by a similar amount each month even at constant international prices. TurkStat’s September CPI on 5 October (Uzmanpara, 2026b) will show the first step and the late-September jump in the transport group. If the sliding scale is not extended for petrol, 2027 begins under a regime in which fuel taxes absorb none of a price shock.
For Saudi Arabia, the 400,000 b/d SAMREF refinery at Yanbu has cut operations by 50% and is expected to run at reduced capacity at least through October (Industrial Info Resources, 2026). If this persists, diesel supply in Mediterranean and European product markets stays tight in October, and Türkiye’s scheduled steps land on a high price base.
Globally, the IEA’s 14 October Oil Market Report (International Energy Agency, 2026) will show whether product-market deficits narrow in the fourth quarter, which determines whether a deferral rule would trigger.
7. Conclusion
The March sliding scale charged 75% of price increases to public revenue but held only 6.1166 TL of diesel buffer, about half of petrol’s. The August switch delivered one-off relief and then tied diesel tax to a price-independent path of 3 TL monthly steps. The September diesel jump came from international prices, and nothing indicates the sliding scale would have had room to absorb 75% of it. The design’s effect is that the full jump reached the pump and a predictable tax step joins the inflation path each month to December, leaving expectations to monetary policy. Price-contingent timing, published buffers and a joint inflation statement would keep the revenue path while removing the signal each step now sends.
SOURCES
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Furkan Mahmut Tameroglu