Finance Minister: Controversial credit card fee is to fund ‘Steel Dome’

Finance Minister Mehmet Şimşek stated that the additional fees to be collected through new proposal submitted to the parliament will be used for the construction of defence systems like Steel Dome, rather than reducing the budget deficit.

The ruling Justice and Development Party (AKP) has introduced a controversial bill to the parliament that would require high-limit credit card holders to pay an annual fee, aiming to generate extra resources for the Defence Industry Support Fund (SSDF).

The proposal ignited a debate about its legality and efficacy with some critics labeling it as a “thinly veiled new tax.”

Answering to the criticisms, Finance Minister Mehmet Şimşek said that the proposal aims to “provide resources for defence, not to reduce the budget deficit.”

Speaking to NTV, Şimşek emphasized:

“Our goal is clear. We’re in a challenging region and need to enhance our deterrence capabilities. There’s currently conflict in our vicinity, and defense projects require funding.”

“We’re allocating significant funds to the Defense Industry Fund, increasing it to 165 billion lira this year. This package is designed solely to provide resources for defense, not to reduce the budget deficit.”

“We plan to establish a Steel Dome to protect Turkey from external attacks. This requires advanced, expensive technologies.”

“We can’t ignore criticisms. The Parliament will consider the feedback received. While I principally disagree with off-budget funds, some are necessary.”

What is the Steel Dome?

The Steel Dome is a comprehensive air defense system approved by the Defense Industry Executive Committee, chaired by President Tayyip Erdoğan, on August 6, 2024.

Officially described as a “domestic and national” project, it aims to integrate layered air defense systems, sensors, and weapons under a network structure. This system will create a common air picture, deliver real-time information to operation centers, and provide AI-supported data to decision-makers.

In simpler terms, the project will coordinate all existing warning systems including aircraft, drones, and satellites with low and high-altitude defense missiles and fighter jets in real-time. It will be Turkey’s first comprehensive air defense system.

Estimated cost and funding

While the exact cost hasn’t been disclosed, the proposed law is expected to generate about 69.3 billion lira (approximately $1.7-1.8 billion) for the Defense Fund in 2025. If passed, about 20% (13.1 billion lira) of this amount would come from the annual 750 lira fee on credit cards with limits of 100,000 lira or more.

Other significant contributions would come from vehicle transactions (18.4 billion), land registry operations (9 billion), and tax returns (28.8 billion). The proposal also includes a 1.7 billion lira contribution from purchases of watches valued at 5,000 lira or more, excluding those for military use.