Cosmeticians who faced with double taxes by paying taxes to the LPG which is used as propellant in products such as deodorant and hair spray let the 90 % of the internal market to the imported products. Mehmet Akat, owner of Akat Cosmetics, said Foreign Chain Markets make purchase to their stores in Turkey from foreign countries. There is no trouble like this for imported products. Production for inner market has been moved to Neighbor Countries.
Cosmeticians, who pay double excise tax for the products such as deodorant, room spray and hair spray, let the inner market to the imported products. The sector paying excise tax while buying LPG used as propellant in said products complains that they pay double taxes by also paying excise tax while selling the products. Mehmet Akat, executive board member of the Association of Aerosol Industrialists and the owner of Akat Cosmetics mentioned that the cost of domestic product is 23 % more than the imported product with the adding of VAT and this causes unfair competition and told that the inner market has been closed to the domestic producer.
The inner market closed
Mehmet Akat telling that while the 70 % of the market was composed of domestic production in 2002, now 90 % of the market is composed of imported products said Domestic producers try to survive with exports. The market is closed for us by the double tax. There are companies stopped their production. Some companies moved to foreign countries to sell their products in Turkey. Bulgaria, Romania and Egypt are ahead among the countries the companies moved their production to.
Moving to Bulgaria
By giving examples from the sector, Akat said Odul Pharmaceuticals terminated its production. Eczacıbaşı was making production for Nivea and 8x4 in the past. Now it brings them from abroad. Mehmet Akat who explained that he is planning to perform filling in Bulgaria by building a facility there, told that: Im transferring the production to another country in order to get over the unfair competition caused by the excise tax. I export the products I produced in the country. I import the products which I produced in another country to Turkey. Foreign companies have been having contract manufacturing in Turkey now importing products from abroad. The brand of SC Johnson Glade is not produced by Johnson&Johnson cologne. Unilever desisted to produce Rexona, Axe and Fa in Turkey.
Spain has but we dont
While mentioning that they signed a contract for Dia Spain in a private label fair he joined in Holland, Akat said that I can make production for Dia in Spain. But I cant for Dia in Turkey. Metro, Carrefour do not supply such products from Turkey anyhow. But the same Metro, Carrefour makes purchase for their stores in other countries.
Excise Tax should be completely annulled
Hayrunnisa Aligil, the president of the Association of Cosmetic Preparations who explained that washing the hair with shampoo, using deodorant and perfume, shaving and rubbing cream is not luxury but daily need, said If the excise tax is made zero, our sales and production will increase, so we can employ more workers. Moreover informality can be prevented. We request the annulment of excise tax from the government. We made several attempts about this matter up to now. But the governments didnt keep their prospects warm by the reason that it will lead to a decrease in the income of the state. But we have a counter idea. We believe that the income of the state will increase and the informality will decrease. Ahmet Pura, the president of TOBB (Turkish Union of Chambers and Commodity Exchanges) Industrialists Assembly of Cosmetic and Cleaning Products mentioned about the increase in personal care products in spite of the crisis and said that The sale of personal care products had an increase of 9.9 % and cleaning products of 13 % in 2008. During the four months of this year the sale of personal care products had an increase of 16.5 % and cleaning products had an increase of 14 %. Double tax is a wrong implementation for the sector which increased its sales in spite of the crisis. We request the excise tax to be annulled and the VAT rates to be overviewed.
Unfair competition affects the domestic producers negatively
The Association of Istanbul Chemical Substances and Products Exporters which mentioned that the Turkish Cosmetics market having 2.4 million dollars and employing 14 thousand people in Turkey has been having trouble because of the double tax, called for the annulment of the double taxes with the other associations having activities in cosmetic sector at the meeting it held. The president of İKMİB, Murat Akyüz said that We use LPG which is a kind of propellant in the production of products daily used such as deodorant, hair mousse, shaving foam and room spray. Although it is a raw material, we pay excise tax. When the products are offered for sale, they are considered in luxury products category. We pay excise tax again. We also pay VAT. When you add them up, a price difference of upto 23 % arises between domestic and imported products. It is hard to survive within the unfair competition caused by this.