The government may utilize taxation as a means to withdraw money from the market

tax

Regarding the frequent news about the possibility of new taxes being introduced, tax law expert Prof. Dr. Funda Başaran Yavaşlar stated, “The new cabinet may use taxation as a tool to reduce inflation and withdraw money from the market.”

Yavaşlar stated the following: “During periods of budgetary difficulties, either new taxes are introduced or existing taxes are increased. For example, following the 1999 earthquake, a mixed tax called the net asset tax and an economic balance tax based on income/gains, indirect taxes such as special transaction tax and special communication tax, as well as additional motor vehicle tax and additional property tax were implemented. What additional taxes could be imposed now? There is already a valuable housing tax alongside property tax, so there is nothing left to be collected there.

There could be an additional tax on motor vehicles, but the burden there is already high. Therefore, my expectation is an increase in indirect taxes that the public is not fully aware of, which are embedded in prices.

Prof. Dr. Funda Başaran Yavaşlar
Prof. Dr. Funda Başaran Yavaşlar

Previously, VAT was reduced in many essential consumption goods, so there could be an increase in those. We may see an increase in special consumption tax and special communication tax. However, increasing indirect taxes is not a healthy method because the burden of indirect taxes on fixed-income individuals is already extremely high. They cannot bear any more.”

Regarding the fight against inflation, Yavaşlar emphasized that taxation will be used as a tool, stating, “Inflation arises from excess money in the market. The money in the market needs to be withdrawn somehow. The only method is not increasing interest rates. Taxation is undoubtedly one of the most important tools to withdraw money from the market. The government may use taxation as a tool to withdraw money from the market.”

Yavaşlar, pointing out that the informal economy rate in Turkey has reached around 40%, said, “Not enough taxes are collected, and the tax burden is on a certain segment. If a fair tax regulation is to be made and if it is necessary for public finance, a temporary tax can be imposed on the incomes/gains of the upper-income group and high-profit-generating institutions. All the details of this can be transparently shared with the public. Predictability must be ensured.”

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