Post by angryumpire on Jan 19, 2010 16:59:27 GMT 2
Indirect taxes offsetting losses from flawed tax system
To offset losses stemming from its failure to have a smoothly running tax base and tax system, the Turkish government relies heavy on indirect taxes, such as the value-added tax (KDV/VAT) and special consumption tax (ÖTV), both of which are levied on the prices of goods and services and collected in advance, at the time of purchase.
The indirect taxes usually impose a heavy burden on consumers since they are as high as 78.25 percent on some merchandise. For instance, the government collects TL 5.47 for a pack of cigarette priced at TL 7. Similarly, TL 2.44 on a litre of petrol, which sells for TL 3.65 per litre goes to the Finance Ministry's coffers.The Anatolia news agency reported on Monday that its calculations of the tax burden on goods and services show that indirect taxes adversely affect income distribution. Considered an indication of an unhealthy tax system, Anatolia noted, the high levels of indirect taxes pave the way to a regime in which high-income earners pay less in taxes, while the tax burden increases for those in lower income brackets. Furthermore, revenue from corporate and personal income taxes, accepted as the fairest instruments of taxation, is declining as a consequence of the heavy concentration of indirect taxes.The government’s 2010 budget envisages collecting TL 42.93 billion in income tax, most of which will be deducted from the wages of workers and civil servants. The total amount of income tax to be collected from the earnings of professionals, such as doctors and lawyers and those who earn interest revenue will only be TL 2.8 bi
The indirect taxes usually impose a heavy burden on consumers since they are as high as 78.25 percent on some merchandise. For instance, the government collects TL 5.47 for a pack of cigarette priced at TL 7. Similarly, TL 2.44 of a liter of gas, which sells for TL 3.65 per liter, goes to the Finance Ministry's coffers. For every TL 3 in mobile phone bills, consumers pay TL 1 in VAT and ÖTV.
The Anatolia news agency reported on Monday that its calculations of the tax burden on goods and services show that indirect taxes adversely affect income distribution. Considered an indication of an unhealthy tax system, Anatolia noted, the high levels of indirect taxes pave the way to a regime in which high-income earners pay less in taxes, while the tax burden increases for those in lower income brackets. Furthermore, revenue from corporate and personal income taxes, accepted as the fairest instruments of taxation, is declining as a consequence of the heavy concentration of indirect taxes.
The government’s 2010 budget envisages collecting TL 42.93 billion in income tax, most of which will be deducted from the wages of workers and civil servants. The total amount of income tax to be collected from the earnings of holding owners, professionals such as doctors and lawyers and those who earn interest revenue will only be TL 2.8 billion
The government has set a target of TL 20.07 billion in revenue from corporate taxes. This figure aside, the government will earn TL 30.7 billion from the consumption of fuel products and natural gas alone, which will be paid largely by ordinary households.
ÖTV revenues derive TL 16.42 billion from tobacco products, TL 3.8 billion from motor vehicles and TL 2.17 billion from alcoholic beverages.
The estimated revenue from ÖTV collection in this year’s budget is TL 4.83 billion. In other words, subscribers of mobile and fixed-line phone operators will pay nearly twice as much as the total amount of income tax.
Gas stations, car dealers operate like tax offices
The VAT and ÖTV from motor vehicles and fuel products are also adding up to significant amounts. The tax on motor vehicles varies from between 38 and 47 percent, depending on engine size and model. For instance, a car with a 1600 cc engine is priced at TL 30,221, but this figure jumps to TL 49,600 after all taxes are included. The buyer has to pay TL 11,181.9 in ÖTV and TL 7,452 in VAT. In other words, the state makes a 38.2 percent profit from the sale of this car without involvement in any part of the production process.Furthermore, around 67 percent of unleaded gas and 58.16 percent of diesel enter the revenue section of the state’s balance sheets. In addition, 79.79 percent of the price of a litre of liquefied petroleum gas (LPG) is collected by the state through indirect taxes.
The above breakdown of indirect taxation in Turkey confirms the previous postings I have made on the Government CASH COW, which shows that there is not a fair and viable tax system in Turkey
To offset losses stemming from its failure to have a smoothly running tax base and tax system, the Turkish government relies heavy on indirect taxes, such as the value-added tax (KDV/VAT) and special consumption tax (ÖTV), both of which are levied on the prices of goods and services and collected in advance, at the time of purchase.
The indirect taxes usually impose a heavy burden on consumers since they are as high as 78.25 percent on some merchandise. For instance, the government collects TL 5.47 for a pack of cigarette priced at TL 7. Similarly, TL 2.44 on a litre of petrol, which sells for TL 3.65 per litre goes to the Finance Ministry's coffers.The Anatolia news agency reported on Monday that its calculations of the tax burden on goods and services show that indirect taxes adversely affect income distribution. Considered an indication of an unhealthy tax system, Anatolia noted, the high levels of indirect taxes pave the way to a regime in which high-income earners pay less in taxes, while the tax burden increases for those in lower income brackets. Furthermore, revenue from corporate and personal income taxes, accepted as the fairest instruments of taxation, is declining as a consequence of the heavy concentration of indirect taxes.The government’s 2010 budget envisages collecting TL 42.93 billion in income tax, most of which will be deducted from the wages of workers and civil servants. The total amount of income tax to be collected from the earnings of professionals, such as doctors and lawyers and those who earn interest revenue will only be TL 2.8 bi
The indirect taxes usually impose a heavy burden on consumers since they are as high as 78.25 percent on some merchandise. For instance, the government collects TL 5.47 for a pack of cigarette priced at TL 7. Similarly, TL 2.44 of a liter of gas, which sells for TL 3.65 per liter, goes to the Finance Ministry's coffers. For every TL 3 in mobile phone bills, consumers pay TL 1 in VAT and ÖTV.
The Anatolia news agency reported on Monday that its calculations of the tax burden on goods and services show that indirect taxes adversely affect income distribution. Considered an indication of an unhealthy tax system, Anatolia noted, the high levels of indirect taxes pave the way to a regime in which high-income earners pay less in taxes, while the tax burden increases for those in lower income brackets. Furthermore, revenue from corporate and personal income taxes, accepted as the fairest instruments of taxation, is declining as a consequence of the heavy concentration of indirect taxes.
The government’s 2010 budget envisages collecting TL 42.93 billion in income tax, most of which will be deducted from the wages of workers and civil servants. The total amount of income tax to be collected from the earnings of holding owners, professionals such as doctors and lawyers and those who earn interest revenue will only be TL 2.8 billion
The government has set a target of TL 20.07 billion in revenue from corporate taxes. This figure aside, the government will earn TL 30.7 billion from the consumption of fuel products and natural gas alone, which will be paid largely by ordinary households.
ÖTV revenues derive TL 16.42 billion from tobacco products, TL 3.8 billion from motor vehicles and TL 2.17 billion from alcoholic beverages.
The estimated revenue from ÖTV collection in this year’s budget is TL 4.83 billion. In other words, subscribers of mobile and fixed-line phone operators will pay nearly twice as much as the total amount of income tax.
Gas stations, car dealers operate like tax offices
The VAT and ÖTV from motor vehicles and fuel products are also adding up to significant amounts. The tax on motor vehicles varies from between 38 and 47 percent, depending on engine size and model. For instance, a car with a 1600 cc engine is priced at TL 30,221, but this figure jumps to TL 49,600 after all taxes are included. The buyer has to pay TL 11,181.9 in ÖTV and TL 7,452 in VAT. In other words, the state makes a 38.2 percent profit from the sale of this car without involvement in any part of the production process.Furthermore, around 67 percent of unleaded gas and 58.16 percent of diesel enter the revenue section of the state’s balance sheets. In addition, 79.79 percent of the price of a litre of liquefied petroleum gas (LPG) is collected by the state through indirect taxes.
The above breakdown of indirect taxation in Turkey confirms the previous postings I have made on the Government CASH COW, which shows that there is not a fair and viable tax system in Turkey
