World Bulletin / News Desk
A recent wave of tax hikes on consumables like gas and alcohol are “not long-term solutions” to Turkey's debt woes, Deputy Prime Minister Ali Babacan said at an International Monetary Fund (IMF) summit this weekend in Tokyo, where he told reporters that the government must take more steps to reign in the staggering portion of Turkey's economy that escapes tax collectors.
“When Turkey's informal economy is reduced, government revenue is going to go up -- that's when it will be possible to reverse course and reduce taxes on consumables,” Babacan told reporters during a press conference.
The minister's promise that the new wave of tax hikes are only temporary comes amid wide public opposition to those hikes, which upped prices on automobiles and alcohol and made Turkish gasoline officially the world's most expensive. Taxes currently make up roughly 70 percent of the cost of Turkish fuel, which costs a staggering TL 4.83 a liter ($10.16 a gallon). That price is a hard burden to bear for Turks, whose average daily income was estimated at just $21.33 in 2011.
The easily enforced tax on sales of consumables like gasoline increasingly stands in for revenue that would have been collected from the near 40 percent of the economy that escapes taxation, Babacan said over the weekend, suggesting in turn that the real way to boost government revenues and balance the government's deficit is to reduce the size of the informal economy.
“In the long run [the consumables tax] isn't a sound policy, we have to agree to that,” he said, adding, “But we need to take measures to preserve fiscal discipline and, in the short run, balance the budget.” Babacan said earlier this month that the budget deficit would expand from TL 33.47 billion this year to roughly TL 34.31 billion by 2015 and warned that the deficit remains one of the largest challenges to the country's economic stability.
The effort to reign in the country's informal economy -- among which the textile and regulation-skirting construction industries have long been the biggest participants -- has already begun, with government officials praising in July a Turkish Statistics Institute (TurkStat) report that concluded that the informal economy had been reduced to 37.5 percent of the country's gross domestic product (GDP). Though still staggeringly high, that number was a considerable improvement over the 50 percent of GDP which for decades escaped any taxes or regulations, and reflects what Babacan and others have said is a five-year campaign to audit company registers and to award stiff fines to firms guilty of tax evasion or failure to register employees for the country's compulsory social security program.
Government taxes on consumables meanwhile continue to bite consumers, with economists warning in September that the spike in fuel costs -- which coincided with a 9.8 percent rise in the cost of natural gas and electricity -- are likely to fuel inflation on basic goods, especially food.
A Pakistani cultural event has captivated thousands of audience members held in Kecioren, Ankara.
Monday's dailies cover Greece's bailout referendum and latest developments on the Turkish-Syrian border
There has been intense activity on the Turkish border for the past two days. New missiles and artillery have been stationed on the border
Consignment, which arrived Sunday, includes six fully-equipped ambulances
World Heritage Committee approve Diyarbakir Fortress and Hevsel Gardens in southeastern Turkey on the list
Sources claim that senior Israeli and Turkish officials have held a secret meeting in Rome to renew talks on a reconciliation agreement between the two nations
The ambassador to the US, John Bass, has shared his concerns with Turkey regarding the territorial integrity of Syria and has said that Turkey should open SEast airbases
The public prosecutors office has sought life sentences for the suspects that violated Turkey’s national security in 2014 when they searched Turkish intelligence trucks in Adana en route to Syria
Turkey on Friday reappointed a former defence minister after his successor was elected as parliamentary speaker.
Turkish newspapers on Friday report on possible coalition scenarios in Turkey, Greece’s bailout referendum
The Turkish Prime Minister Ahmed Davutoglu has said that he will not peculation about Turkish military action in Syria, saying country will not be put at risk
Trans Anatolian Natural Gas Pipeline will have significant effect on economies involved, SOCAR Turkey CEO Kenan Yavuz told
A Syrian refugee has set himself on fire to protest his 15 year old sons abduction by the PKK.
Turkish dailies on Thursday report on the Turkish parliamentary speaker election, Greek debt crisis
Thousands take to streets all over Turkey to protest China's alleged ban on Muslims fasting during Ramadan