Turkey to collect more tax from rich: Minister

ANKARA

Finance Minister Mehmet Şimşek. AA Photo

The government is planning to collect more tax from rich people and less from people who have low incomes, Finance Minister Mehmet Şimşek said yesterday, signaling the content of new income tax reform.

“We want to take more tax from the ones who have high incomes, and less from low-income groups. This is what tax equity requires. We will levy incomes in the new income tax reform,” Şimşek told private broadcaster CNBC-e.

The minister said his department had finished its work on a reform package and would soon send the matter to Prime Minister Recep Tayyip Erdoğan and his Cabinet. “This package will serve Turkey for a long time. We are taking necessary steps to spread the tax to the base,” Şimşek said, noting the size of indirect taxes in Turkey.

Turkey ranked 28th among 34 Organisation for Economic Co-operation and Development (OECD) countries in taxes on incomes and earnings, while the share of indirect taxes in total is 47.7 percent, according to recent figures from the Finance Ministry.

Şimşek said new regulations would not affect general tax rates in the coming year, while fixed taxes, such as taxes on cigarettes, would increase in accordance with the inflation rate. At the same time, he said the taxation of tobacco products would be compatible with the rate in the European Union. Turkey obtains more than $10 billion in tax revenues per year from cigarettes.

The minister said also they intended to gradually reduce the private communication tax but that they had not yet made any progress on the issue.

Commenting on the privatization process, Şimşek said no decision had been made over the selling of “İddaa,” Turkey’s sole legal sports gambling game. Recent media reports claimed that the government planned to privatize Spor Toto, which also includes İddaa, in June 2013 at an estimated value of around $10 billion.

Şimşek also warned that those who do not take the privatization seriously should not become involved in the process, referring to widespread problems in the sell-off of electricity distribution rights in recent years.
The minister also defended the latest privatization of toll roads and bridges, saying: “The private sector is much better than the state in terms of efficiency. The meaning of privatization is not only income. We will spend $5.7 billion in building divided roads and we will have a chance to build new roads.”

Şimşek also dismissed a possible cut to pensioners’ wages. “I did not say pensioners’ wages were high – the media skewed my words. Most retired people did so with the Social Security Institution [SSK]. They paid premiums above the minimum wage while they were working. So a part of their earnings were not taxed,” he said. “While the minimum wage is 740 Turkish Liras, the pensioners’ wage is 880 liras. I remarked that the pensioners’ wage could be considered ‘high’ in regard to their premium paying rate. Pensioners’ wages are not high, but the government aims to raise them as high as possible.”