Gray loss more than budget gap in Turkey

ANKARA

Finance Minister Mehmet Şimşek (C) gestuerds during the budget talks at the related commission at the Parliament. The government could not reach its privatization goals this year, he says.

Turkey’s central budget would gain 40 billion Turkish Liras of additional tax revenues if the current ratio of the unregistered economy was reduced to the Organisation for Economic Co-operation and Development (OECD) average, Finance Minister Mehmet Şimşek has said. This would put the 2013 budget into surplus, instead of the 33 billion-lira gap approved by the parliamentary budget commission the evening of Nov. 26.

The budgetary expenditure for next year is estimated at 444 billion liras, while the revenues are predicted at nearly 411 billion liras. The ratio of unregistered employment in Turkey is 38 percent, down from 50 percent 10 years ago, Şimşek said during discussions on the draft budget, citing data from the Turkish Statistical Institute (TÜİK). The size of the unregistered economy is estimated at 27.2 percent by surveys, he added.

Optimistic of future

The average size of the unregistered economy in the OECD is 19.2 percent, he said. “If we catch up with the OECD average in unregistered economy, we will have an additional 40 billion liras of tax revenues. We have to succeed this in the upcoming three-to-seven year period.”

Şimşek said the government was considering taking steps to increase the amount of direct taxes. “The tax burden in Turkey is not heavy; however, there is an imbalance between direct and indirect taxes,” he said. Income tax and corporate tax make up merely 6 percent of the gross domestic product, he added.

Parliament will vote on the budget Dec. 11.

The finance minister admitted that the government could not achieve its 2012 privatization goals. Some $12.8 billion of privatization tenders were completed at the beginning of the year, he said. “We thought that if even half of these tenders were to be materialized, the government would achieve its goal, but we were wrong.”

Halkbank privatizatioın

With the secondary public offering of state-run Halkbank, the privatization figure will reach some $7 billion, he said. A total of $38 billion of revenues were created in privatizations since the Justice and Development Party came to power in 2002, he said.

Particularly energy privatizations had proved to be unsuccessful due to successive withdrawals of the winning bidders.

Meanwhile İzzet Çetin, a deputy from the main opposition Republican People’s Party (CHP), thanked Şimşek humorously for not achieving the privatization targets.

Claiming that the Privatization Administration (ÖİB) had done a very bad job, Çetin said the resources of the country had been transferred to only particular segments of the public.

Eye on municipalities

Şimşek also indicated that the ministry planned to watch closely the revenues of municipalities in the year before local elections. The ministry has started to compile the financial data from the municipalities and enter them into a central information system, he said, adding that the size of the local administrations would be calculated by taking the financial data from the municipal firms into consideration.