Research Article


DOI :10.26650/ISTJECON2019-0012   IUP :10.26650/ISTJECON2019-0012    Full Text (PDF)

The Development of the Tax Expenditures in Turkey: 2015-2021

Recep Emre Eriçok

Nowadays, tax expenditures are extensively applied in many countries in order to achieve certain economic and social goals more effectively and quickly. Tax expenditures generally represent forgone tax revenues and in practice they appear in the form of tax exemptions and exceptions, reductions, credits, low tax ratios and tax deferrals. Tax expenditures, which are practices that lead to tax loss in terms of the public economy, are also considered as a kind of public expenditures. Therefore, the effective implementation of tax expenditures in the public economy is important in terms of income and expenditure policies. In this study, prepared in order to analyse the development of tax expenditures in Turkey, first the concept of tax expenditures and the theoretical framework and implementations were examined, then the volume of tax expenditures, increase ratios, distribution according to the categories of taxes, and ratios to various macro indicators were analysed, using the estimated tax expenditures of the 2015-2021 period in Turkey. Then, the functional distribution of tax expenditures were covered and it was determined which areas these expenditures are directed towards. Finally, the ratio of tax expenditures in Gross Domestic Product in various countries was examined and an attempt to determine the situation in Turkey was made. The results of the study show that tax expenditures are extensively applied in Turkey especially in recent years, as an active fiscal policy tool besides the other policy measures, in order to revive the economy. Furthermore, it is envisaged that tax expenditures will contribute positively to the economic performance of Turkey by means of increasing efficiency and effectiveness and providing fiscal transparency in tax expenditures.

JEL Classification : H00 , H20 , H60
DOI :10.26650/ISTJECON2019-0012   IUP :10.26650/ISTJECON2019-0012    Full Text (PDF)

Türkiye’de Vergi Harcamalarının Gelişimi: 2015-2021

Recep Emre Eriçok

Günümüzde pek çok ülkede belirli ekonomik ve sosyal amaçların daha etkin ve hızlı şekilde gerçekleştirilmesi amacıyla vergi harcamaları yoğun şekilde uygulanmaktadır. Vergi harcamaları genel olarak vazgeçilen vergi gelirlerini ifade etmektedir ve uygulamada vergi muafiyeti ve istisnaları, indirimler, mahsuplar, düşük vergi oranları ve vergi ertelemeleri şeklinde karşımıza çıkmaktadır. Kamu ekonomisi bakımından vergi kaybına yol açan uygulamalar olan vergi harcamaları, aynı zamanda kamu harcamalarının bir türü olarak kabul edilmektedir. Dolayısıyla gelir ve harcama politikaları bakımından vergi harcamalarının kamu ekonomisinde etkin şekilde uygulanması önem arz etmektedir. Türkiye’de vergi harcamalarının gelişimini analiz etmek amacıyla hazırlanan bu çalışmada, öncelikle vergi harcamaları kavramı, teorik çerçevesi ve uygulamaları incelenmiş, daha sonra Türkiye’de 2015-2021 dönemi vergi harcamaları tahminleri kullanılarak vergi harcamalarının büyüklüğü, artış oranları, vergi türlerine göre dağılımı, çeşitli makro göstergelere oranları analiz edilmiştir. Daha sonra vergi harcamalarının fonksiyonel dağılımına yer verilerek bu harcamaların hangi alanlara yöneldiği tespit edilmiştir. Son olarak çeşitli ülkelerde vergi harcamalarının Gayrisafi Yurt İçi Hasılaya oranları incelenerek Türkiye’nin durumu ortaya konulmaya çalışılmıştır. Çalışmadan elde edilen sonuçlar, Türkiye’de özellikle son yıllarda ekonomiyi canlandırmak için diğer politika önlemlerinin yanı sıra vergi harcamalarının aktif bir maliye politikası aracı olarak yoğun şekilde uygulandığını ortaya koymaktadır. Ayrıca vergi harcamalarında verimlilik ve etkinliğin artırılması ve mali saydamlığın sağlanması durumunda vergi harcamalarının Türkiye’nin ekonomik performansına olumlu katkılar sağlayacağı öngörülmektedir.

JEL Classification : H00 , H20 , H60

EXTENDED ABSTRACT


Nowadays, tax expenditures are extensively applied in many countries in order to achieve certain economic and social goals more effectively and quickly. This situation reveals the importance of fiscal discipline in OECD countries, one of which is Turkey. In recent years, the increasing need for public services has led to increases in demand for public expenditures. In this context, tax which is the most important resource of financing public expenditures, has become an important implementation tool of fiscal policies. In addition to the implementation of tax as a fiscal policy tool for the purpose of financing public expenditures, it can also be applied indirectly in the form of tax expenditures in place of forgone tax revenues, for the purpose of economic and social policies.

Tax expenditures, which were introduced for the first time in the 1960’s and which are extensively applied in many countries in order to achieve certain economic and social goals more effectively and quickly, constitute an important discussion topic. Thus, tax expenditures generally represent forgone tax revenues and are generally applied in the form of tax exemption and exceptions, reductions, credits, low tax ratios and tax deferrals. The fact that tax expenditures have the qualifications of extra budgetary public expenditures and the transfer of funds from the public sector to the private sector increases these discussions further. Therefore, the efficient and effective implementation of tax expenditures is becoming more and more important in terms of income and expenditure policies.

In this study, prepared in order to analyse the development of tax expenditures in Turkey, first the concept of tax expenditures and the theoretical framework and implementations were examined, then the volume of tax expenditures, increase ratios, distribution according to the categories of taxes, and ratios to various macro indicators were analysed, using the estimated tax expenditures of the 2015-2021 period in Turkey. Then, the functional distribution of tax expenditures was covered and it was determined which areas these expenditures are directed towards. Finally, the ratio of tax expenditures in Gross Domestic Product (GDP) in various countries and the situation in Turkey were examined, and an attempt was made to develop some policy recommendations in order to apply tax expenditures more efficiently and effectively.

The findings of the study show that tax expenditures are extensively applied in both developed and developing countries and they continue to increase despite efforts to decrease tax expenditures in the context of fiscal discipline practices. In Turkey, tax expenditures have attained a significant level and in addition to tax laws, there are tax incentives in the form of tax expenditures in many laws. In Turkey, it is envisaged that tax expenditures which are 79,6 billion TL in 2015 will reach 230 billion TL in 2021, by increasing with an annual average 19,3% ratio. In addition, significant increases have been realised in tax expenditures, especially in 2017, 2018 and 2019. This data shows that tax expenditures are extensively applied in Turkey especially in recent years, as an active fiscal policy tool besides the other policy measures, in order to revive the economy.

The Income Tax takes the highest share of the tax expenditures in Turkey. In 2018, 38,4% of total tax expenditures comes from the Income Tax, 27,7% from the Value Added Tax, 15,6% from the Corporate Tax, 14% from the Special Consumption Tax and 4,3% from the other taxes. In 2018, 55,9% of the tax expenditures in the Income Tax consisted of the minimum living allowances. This ratio constitutes 21,8% of total tax expenditures. The fact that the highest shares of tax expenditures are the the Income Tax and the minimum living allowances in the Income Tax, is also important in terms of showing that the tax expenditures are applied to improve the income distribution.

In 2018, the ratios of tax expenditures to tax revenues obtained in the same categories of taxes were 41,7% the Income Tax, 29,9% the Corporate Tax, 23,5% the Value Added Tax, 15,8% the Special Consumption Tax and 7,1% under the other laws in Turkey, while the majority of tax revenues consist of indirect taxes, the implementation of tax expenditures mostly to taxes on income decreases the balance in tax distribution.

Regarding the functional distribution of the tax expenditures in Turkey, labor market development, wages and employment has a share of 24,5%, development of the business world and increasing of investments has a share of 20,7%, infrastructure, energy and transportation has a share of 18,5%, increasing of domestic savings and deepening of the financial markets has a share of 14,7%. These are followed by tax incentives for agriculture with 9,9%, tax expenditures for health and social purposes with 9%, Research & Development, innovation and design activities with 2,4%, tax expenditures in education, culture, sports and arts with 0,4%.

The functional distribution is important in terms of showing how tax expenditures are applied within the scope of determined economic and social goals. In recent years, implementations such as minimum living allowances, private pensions, business incentives, research and development incentives, important infrastructure, energy and transportation projects, and agricultural supports show that tax expenditures are extensively applied within the scope of these determined economic and social goals.

In 2018, while the ratio of tax expenditures in GDP was 4,1% in Turkey, the share of tax expenditures in budget revenues, tax revenues, and budget expenditures were 19,9%, 24,3% and 18,2% respectively. These ratios are significant when they are compared to many countries’ ratios. In 2018, Canada with 18,6%, Australia with 9,3% and The United States of America (USA) with 6,7% are ranked among the countries with the highest ratio of tax expenditures in GDS. Turkey with 4,1% ratio of tax expenditures in GDP is one of the countries where tax expenditures are extensively applied for the purpose of various economic goals outside public expenditures.

In this context, some policy recommendations such as a more effective realisation of cost-benefit analyses on tax expenditures, the calculation of tax expenditures in the most realistic manner with minimum error, the determination of the tax expenditures’ objectives and the explication to the public opinion, the regular and more detailed reporting of estimated tax expenditures/continue to be reported, the functional classification of tax expenditures by sectors, the submission of the reports to the public opinion within the annual budget, the monitoring of the harmony level between the expenditures and the goals and the explication to the public opinion, the termination of ineffective tax expenditures or the replacement with the effective tax expenditures, the simplification of the Tax System, the inclusion of the tax incentives other than tax laws in the form of tax expenditures and providing transparency in resource allocation on tax expenditures are presented in order to apply tax expenditures more efficiently and effectively in Turkey. With these policies, it is envisaged that tax expenditures will contribute positively to Turkey’s economic performance in such a way that the efficiency and effectiveness of tax expenditures are increased and fiscal transparency is achieved.


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APA

Eriçok, R.E. (2019). The Development of the Tax Expenditures in Turkey: 2015-2021. Istanbul Journal of Economics, 69(2), 321-355. https://doi.org/10.26650/ISTJECON2019-0012


AMA

Eriçok R E. The Development of the Tax Expenditures in Turkey: 2015-2021. Istanbul Journal of Economics. 2019;69(2):321-355. https://doi.org/10.26650/ISTJECON2019-0012


ABNT

Eriçok, R.E. The Development of the Tax Expenditures in Turkey: 2015-2021. Istanbul Journal of Economics, [Publisher Location], v. 69, n. 2, p. 321-355, 2019.


Chicago: Author-Date Style

Eriçok, Recep Emre,. 2019. “The Development of the Tax Expenditures in Turkey: 2015-2021.” Istanbul Journal of Economics 69, no. 2: 321-355. https://doi.org/10.26650/ISTJECON2019-0012


Chicago: Humanities Style

Eriçok, Recep Emre,. The Development of the Tax Expenditures in Turkey: 2015-2021.” Istanbul Journal of Economics 69, no. 2 (Feb. 2021): 321-355. https://doi.org/10.26650/ISTJECON2019-0012


Harvard: Australian Style

Eriçok, RE 2019, 'The Development of the Tax Expenditures in Turkey: 2015-2021', Istanbul Journal of Economics, vol. 69, no. 2, pp. 321-355, viewed 24 Feb. 2021, https://doi.org/10.26650/ISTJECON2019-0012


Harvard: Author-Date Style

Eriçok, R.E. (2019) ‘The Development of the Tax Expenditures in Turkey: 2015-2021’, Istanbul Journal of Economics, 69(2), pp. 321-355. https://doi.org/10.26650/ISTJECON2019-0012 (24 Feb. 2021).


MLA

Eriçok, Recep Emre,. The Development of the Tax Expenditures in Turkey: 2015-2021.” Istanbul Journal of Economics, vol. 69, no. 2, 2019, pp. 321-355. [Database Container], https://doi.org/10.26650/ISTJECON2019-0012


Vancouver

Eriçok RE. The Development of the Tax Expenditures in Turkey: 2015-2021. Istanbul Journal of Economics [Internet]. 24 Feb. 2021 [cited 24 Feb. 2021];69(2):321-355. Available from: https://doi.org/10.26650/ISTJECON2019-0012 doi: 10.26650/ISTJECON2019-0012


ISNAD

Eriçok, RecepEmre. The Development of the Tax Expenditures in Turkey: 2015-2021”. Istanbul Journal of Economics 69/2 (Feb. 2021): 321-355. https://doi.org/10.26650/ISTJECON2019-0012



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Submitted02.05.2019
Accepted08.12.2019
Published Online31.12.2019

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