Raki, the anise-flavored national drink, for instance, has virtually become a luxury product, with consumers paying 131 liras ($18) in taxes on a bottle with a price tag of 180 liras ($25). Exorbitant taxes on alcoholic beverages have long stirred controversy in Turkey, as many see them as an attempt by the government to curb alcohol consumption in line with its Islamic worldview. Another 37% came from the special consumption tax, levied on fuel, spirits, tobacco, automobiles and durable goods. More than 50% of Turkey’s indirect tax revenues last year came from VAT, which is as high as 8% even on food items. Moreover, the share of indirect tax revenues in the EU is no more than 55%. Ireland and Romania have rates similar to that of Turkey, but in other EU states such as Belgium, Denmark, France and Sweden, the ratio of revenues from taxes and social contributions to GDP is well above the bloc’s average, exceeding 45% in some cases. In Turkey, the rates stand at 17% and nearly 25%, respectively. With the addition of social security contributions, the ratio rises to more than 41%. Turkey’s tax indicators lag behind that of the European Union, which it is seeking to join.ĭespite the rise of neoliberal trends promoting less tax and less government spending since the 1980s, tax revenues in the 27-member EU amount to 27% of its gross domestic product (GDP). Meanwhile, high-income groups, which do not exhaust all their earnings, are effectively exempt from taxation on the incomes they put aside. Even the poorest of people, who rely on unemployment allowances or social welfare, pay taxes through every penny they spend. The extensive indirect taxes on consumption mean that low- and middle-income groups, which typically spend all their income to make a living, are effectively subject to taxation on the entirety of their incomes.
![mustafa sonmez mustafa sonmez](https://i.ytimg.com/vi/IDMcAEKXeFQ/maxresdefault.jpg)
More increases are expected to follow in the coming days. The government raised the tax on communication services by 2.5 percentage points to 10% in late January before announcing a multifold hike on electric car taxes earlier this week. The new year began with fresh tax increases for Turkish consumers. As a result, indirect tax revenues exceeded the government’s target by more than 12%.ĭespite the more-than-expected tax revenues, the government posted a budget deficit of some 173 billion liras ($24 billion) last year, which led to more borrowing and thus a swelling public debt stock. The increase was due to Ankara’s encouragement of cheap credit, especially in the second half of 2020, to stimulate consumption and resuscitate the pandemic-ravaged economy.
![mustafa sonmez mustafa sonmez](https://m.bianet.org/system/uploads/1/articles/spot_image/000/244/730/original/fa.jpg)
Indirect taxes, including the value-added tax (VAT), the special consumption tax and the special communication tax among others, brought in 551 billion liras ($77 billion), accounting for 66% of all taxes, up from 61% the previous year.
![mustafa sonmez mustafa sonmez](https://i1.rgstatic.net/ii/profile.image/278874593218561-1443500292130_Q512/Mustafa-Soenmez.jpg)
Unjust distribution of the tax burden - a major component of economic inequalities in Turkey - has further exacerbated during the coronavirus pandemic, but far from looking for remedies, Ankara has recently hiked taxes that affect low- and middle-income groups the worst.īudget performance data, released in mid-January, show that tax revenues in the central government budget totaled 833 billion Turkish liras ($117 billion) in 2020, with the bulk coming from indirect taxes levied on consumption. Two-thirds of the Turkish government’s tax revenues have come from indirect taxes on consumption, adding to the burden of low- and middle-income groups.