Contemporary Approaches in Humanities by Hasan Arslan Mehmet Ali Içbay Günther Löschnigg Rasim Yilmaz

Author:Hasan Arslan,Mehmet Ali Içbay,Günther Löschnigg,Rasim Yilmaz
Language: eng
Format: epub
Publisher: Peter Lang AG
Published: 2016-12-10T05:00:00+00:00

* * *

* Hitit University, Faculty of Economics and Administrative Sciences, Corum, Turkey, [email protected]

** Usak University, Faculty of Economics and Administrative Sciences, Usak, Turkey [email protected]

*** This study was supported by the Hitit University Scientific Research Projects Unit. Project No: BEDE 1908–04

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Asst. Prof. Neslihan Koc *

Tax Expenditures in Turkey: Problems and Evaluations1

Abstract Tax expenditures express public revenues, which are dispensed through exemption, exclusion and discounts. Formation of tax expenditures statement was made obligatory by the law no. 5018. This is a positive development, in the sense of providing the connection of tax expenditures with the budget process. However, a set of problems, such as what will be taken into account as tax expenditures and the burden that tax expenditures will create in the budget or the tax burden created for the taxpayers, which are caused by the concept itself or the application, exist. Not being able to reach detailed information related to tax expenditures means these expenditures will be subject to neither parliament nor public control.

Keywords: Tax Concessions, Tax Expenditures, Fiscal Transparency

1. Introduction

The basic operation of public finance is related to providing public services devoted to societal needs. Therefore, public spending is made within the framework of the budget and its financing is largely provided through taxation or borrowing. Although they should be collected during the taxation process, revenues that are not collected due to fiscal, financial or social reasons are named as tax expenditures and assessed as public spending.

A set of deficiencies observed in our country about tax expenditures, which can be assessed as a finance policy tool, shadow positive goals that are desired to be achieved. In our study, identification of tax spending purposes, general problems about tax expenditures and practices in our country and problems in practices are reviewed.

2. The Concept of Tax Expenditures

In broad terms, tax expenditures include tax exemptions, allowances, credits, rate relief, and tax deferral (Biçer& Yılmaz, 2009: 72). Tax expenditures indicate public ← 183 | 184 → revenues waived through exemption, exception and discounts, or tax losses caused by privileged conditions of tax laws.

On the other hand, when considered in terms of the budgeting process, tax expenditures are viewed as a kind of “concealed expenditure” (Saraç, 2010: 263). Tax expenditures are a tax incentive mechanism, just like keeping tax rates low, tax deferrals, and investment allowances practices. While some tax expenditures create continuous income loss for the government like public expenditures; some cause the income to be deferred to the future. These, in a sense, qualify as an interest-free loan given to the taxpayer (Giray, 2002: 33).

Some distinguishing features are used in the description of tax expenditures (OECD, 1996: 9):

– tax concession to benefit a specific industry, activity of taxpayer group,

– tax system to serve a purpose, which can be realised with other tools, other than its effectiveness,

– the related tax to have a wide enough scope, in order to be able to measure the value of a privilege against a benchmark (standard tax practice),

– change of the tax system to be

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