MÜSİAD

The Need for Tax Reform in Türkiye

and

Panel on Simplicity in Taxation

13 December 2023

Honourable Deputy Minister,

Esteemed Bureaucrats,

Esteemed guests,

Welcome to our Panel on the Need for Tax Reform in Türkiye and Simplicity in Taxation; you have honoured us with your presence. I respectfully greet you all.

As you are aware, Article 73 of the Constitution, entitled Duty of Taxation, states: “Everyone is obliged to pay taxes according to his financial capacity in order to meet public expenditure.

The just and balanced distribution of the tax burden is the social aim of fiscal policy.” This is the provision set out therein.

Accordingly, the fundamental criterion in taxation is that everyone pays tax according to his financial capacity, that the tax burden is distributed justly and in a balanced manner, and that its quality of ensuring social balance is taken into consideration.

The great development our country has achieved in recent years and the contributions of the economic administration to the said development are commendable in every sense.

MÜSİAD and the businessmen within it, who intend to contribute to the progress of our country in every sense and in every field, desire that this development and progress continue.

What matters from now on is that fiscal discipline can be maintained in the future as well. For in order to have a strong economy in the future, a sound public economy is needed.

And for fiscal discipline to be sustainable, it is necessary to pursue fiscal policies consistent with prudent monetary policies.

In this context, the harmony between monetary and fiscal policies, which has visibly increased particularly with the coming to office of the new economic administration, is gratifying for all the actors of the economy.

Another important condition for a sound public economy is, undoubtedly, increasing efficiency in public expenditure.

In an economy where there are no savings, it is out of the question to speak of sustainable growth.

For continuous borrowing cannot be taken as the basis for raising the level of prosperity. Therefore, raising the savings rate is essential in the Turkish economy.

In this context, one of the main aims of fiscal policy should also be to increase public savings. And this will be possible by creating sound additional sources of revenue outside taxes.

In this scope, the Circular sent by the Ministry of Treasury and Finance of the Republic of Türkiye to public institutions on 17 July 2023 regarding the rationalization of state expenditure has been gratifying.

For saving on public expenditure that leads to waste and inefficiency, and directing these resources to necessary and productive areas of spending, will bring benefit not only for budget discipline but also in terms of economic development.

Honourable Deputy Minister,

Esteemed guests,

It is evident that the public budget is under significant financing pressure because of the economic fluctuations experienced in recent years and the transfer and investment expenditure incurred after the pandemic and natural disasters.

Indeed, alongside the negative developments experienced on a global scale, the increase in budget expenditure has accelerated under the effect of the election process as well.

For this reason, in the coming period public finance emerges before us as a field on which we must concentrate more than ever.

At this point, the statement by our Minister of Treasury and Finance Mr. Mehmet Şimşek that the tax laws are being reviewed, and his signalling of a tax reform, has pleased us all.

Of course, we must state that while changes are made in tax policy, it is also of vital importance that a tax policy which prioritizes and adopts tax justice be implemented, taking into account two matters that closely concern social life, namely inflation and income distribution.

Before the regulations are put into practice, their possible effects on production, employment, inflation and, particularly in the context of international competition, on exports must be analysed in detail.

Honourable Deputy Minister,

Esteemed guests,

From whom and how much should taxes be collected? How should the amount of tax to be paid be determined according to the various personal and financial circumstances of individuals? What fundamental principle should be taken into consideration when distributing among individuals, as tax, the burden of the public services that the state will provide?

I hope that our panel, in which we will address all these questions and problems comprehensively, may be a means of goodness; and with these thoughts and feelings, as I conclude my words, I thank you all once again for your valued participation.

May God protect you.

Mahmut Asmalı

President of MÜSİAD