Tax Preferences and Post-Election Expectations

Dear friends, the political organization called the state needs resources to sustain its existence. Cem Eroğul mentions three duties of the state in his book "What is the State?". These are listed as the state's duties towards the interests of the ruling class, its duties towards the people and its duties towards its own organizational structure (1). 

The state meets the resources it needs to fulfill the duties expected of it to a great extent from the taxes it collects from citizens. When we look at the revenues of the state; we can talk about two types of revenue items: forced and voluntary. The revenues we will focus on here are taxes, duties, fees, penalties and others, which are called compulsory revenues. Today, about 90 percent of state budgets consist of tax revenues (2). 

If there is a balance between the above-mentioned duties of the state, we can say that there is a legitimate basis for the collection and use of tax revenues. However, if there is no balance, first the legitimacy ground is lost, and then the demands of the people from the government come to the agenda. The high level of citizenship awareness of the mass that will raise these demands is an important factor limiting the attitude of governments towards the public. The beginning of citizenship awareness is tax awareness.

Status of Tax Revenues and Tax Awareness in Turkey

The policies implemented by the current political power during its long period in power consist of preferences in favor of capital. With each regulation, efforts to create a new order in line with the neo-liberal approach under the name of "reform" have been observed. In Turkey, the balance in favor of indirect taxes has been maintained under the current political power. While direct taxes generally depend on the taxpayer's ability to pay, indirect taxes do not take into account the taxpayer's income and wealth. Therefore, the place of direct taxes in ensuring tax justice is very important. In developed countries, direct tax revenues are generally higher than indirect taxes, whereas in Turkey, indirect taxes constitute 60-70 percent of tax revenues, depending on the year. In indirect taxes, the taxpayer is not certain. Everyone who uses the taxed goods and services pays the tax regardless of their income. Taxes such as VAT, SCT and SCT are indirect taxes. Every year, when the budget law is discussed, the approximate proportions of the projected tax revenues are determined. However, the budget law negotiations do not receive the attention they should from the public, even though they directly concern their own pockets. 

Generally, the tax awareness of those who pay indirect taxes is much lower than those who pay direct taxes. Therefore, while increases in taxes with a clear taxpayer base and high taxpayer awareness cause reactions from those who pay these taxes, increases in indirect taxes do not cause a great reaction from the public. In addition, increases in indirect taxes have a much greater impact on impoverishing the population and reducing purchasing power. However, in the short term (an election period), political governments that aim to finance public services to get votes and come back to power prefer to increase indirect taxes. The higher the tax awareness in a country, the more effective the public control of the administration. Unfortunately, the high level of indirect taxes in our country neutralizes the control of governments by the people. In other words, "active citizenship", which is a requirement of participatory democracy, melts away in the helpless acceptance of indirect taxes.

From 2002 to 2013, tax revenues in dollar terms increased continuously from USD 39.5 billion to USD 192.4 billion. However, since then, tax revenues have continuously decreased until 2020, falling to 140 billion dollars (3). 

It is not possible to explain this continuous decline without taking into account the groups with which the political power has been struggling for power since 2013, the uprising launched in 2016 by a religious organization that gained strength during the government period to completely take over the institutions of the state, and of course the presidential system introduced with the 2017 referendum. In other words, there is a clear relationship between the success of governance and tax revenues and fairness.

In Kudadgu Bilig, Yusuf Has Hacip argues that the strength of the state depends on the wealth of the people, and for the people to be wealthy, the ruler must make the right laws. "O lawgiver, make good laws; he who makes bad laws is dead while he is still alive. /beyit: 1458" (4). 

In fact, it is no coincidence that all historical texts emphasize justice. Where there is no justice, the oppressor has his say and the legitimacy of the government cannot be mentioned. However, against a government that has lost its legitimacy, only a people who are aware of their citizenship rights (tax rights) can control the government, limit the power of the government, and bear the responsibility of the sovereignty given to them by the constitution. 

What are the Expectations on Taxes in the Run-up to the Elections?

In an environment where early elections are expected in 2023, one of the most important areas of discourse difference between the opposition and the government is undoubtedly tax rates. In fact, public policy on tax rates also includes class and ideological preferences. The SCT on alcoholic beverages and cigarettes is the product of such a preference. Attempts to justify this preference with the idea of public health are baseless and unrealistic. This is because it triggers the formation of an illegal market for out-of-control products that threaten public health even more. Another SCT preference is the tax on automobiles. The high level of this tax has led to the formation of a significant institutional structure in the second-hand market in Turkey. When these corporate structures started to buy a limited number of zero cars and sell them second hand at a higher price than the dealers' zero sales, the 6-month and 6000 km. rule was introduced. There is basically only one reason for all this activity; the taxes levied on automobiles are much higher than world standards and as you can imagine, these taxes are indirect taxes. 

As the elections approach, the prospect of the opposition coming to power has created positive expectations among the public in terms of taxes. The opposition's rhetoric on this issue also supports these expectations. However, when economic realities are taken into account, it becomes clear that the rhetoric needs to be backed up. If the opposition comes to power, can taxes on vehicles, alcoholic beverages and cigarettes be reduced? Of course, they can be reduced, but it is inevitable that each tax item to be given up will be replaced by another tax, at least in the medium term. This means that in products and services where tax reductions are expected, this can only be achieved if there is the will to undertake a total tax reform with a preference that prioritizes the welfare of the people in all tax revenues. It should not be forgotten that the special communication tax, which was imposed temporarily after the 1999 earthquake, became permanent because the government could not find another tax to replace it. Of course, not finding a replacement tax is a class and political choice, never an impossibility.   

Conclusion

Today, the most important element ensuring the functioning of the democratic rule of law is the sense of citizenship. Limiting the destructive effects of political society cannot be done by law alone. Without citizens who have internalized the law and have the citizenship consciousness to uphold it, a tyrant can emerge even from the best legal rules. The historical basis of citizenship consciousness is tax consciousness. A people who are unable to account for the taxes they pay take the risk of being subjected to all kinds of oppression and persecution. Citizens' awareness of the taxes they pay depends on the fact that the majority of the population is defined as taxpayers and that the majority of tax revenues collected are direct taxes. 

If there is a conclusion to be drawn, it is that high and fair taxes in a country depend on the success or failure of the administration. If there is a government that does not take the public interest and science as a basis when spending tax revenues, both the injustice in the tax profile and the continuous increase in tax rates are the result of the incompetence of the government. Even though it is considered a technical issue and is not on the agenda much during the election process, the public awareness that the opposition can raise on this issue can have a much greater impact on the outcome of the elections than expected. To this end, the opposition should make it clear to the public in a short period of time that there will be a tax reform that is grounded on the ground and in line with social reality, with its justifications and details. With the help of valuable mass communication experts, this could find a great response among the public. The only problem is the will of the opposition to try to close the deficits through indirect taxes that the public does not feel. 

Footnotes

(1) Cem Eroğul, (2002), Devlet Nedir?, 3. Basım, İmge Kitabevi, Ankara.

(2)https://acikders.ankara.edu.tr/pluginfile.php/

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(3)https://www.dogrulukpayi.com/bulten/2002-den-bu-yana-ak-parti-iktidarlarinda-elde-edilen-vergi -geliri-ne-kadar, veriler; Gelir İdaresi Başkanlığı.

(4) M.Ali Çakmak, R. Tezcan, (2016), "Kutadgu Bilig’e Göre Türklerde Adalet Anlayışı", Akademik Hassasiyetler, C.3, S.5.