Tax Expert Ulaş İke emphasized that indirect taxes are taxes based on economic events such as production and consumption without taking into account the income levels of individuals and continued his words as follows:
“Indirect taxes are taxes collected regardless of individuals’ income levels. There is no special treatment such as race, religion, gender, income level, married or single, refugee or immigrant. Everyone who causes the tax to occur is a taxpayer.
VAT (Value Added Tax), which came into effect in Turkey in 1985, and SCT (Special Consumption Tax), which came into effect in 2002, can be given as examples of indirect taxes.
As you may remember, after the latest regulations, there was an increase in VAT rates and the VAT rates from 8% were increased to 10% and the VAT rates from 18% to 20%.
Since every individual pays the same amount of taxes in taxes on consumption expenditures, individuals belonging to the upper income group pay their taxes with a smaller portion of their income. At this point, as taxpayers’ incomes decrease, their tax burden increases.” he said.
The problem of inequality between income groups deepens
Stating that the indirect taxes that everyone must pay, regardless of the amount of income, remain a burden on low-income individuals, Ulaş İke said, “This situation further deepens the problem of injustice between individuals in different income groups.
Low-income individuals may face more financial difficulties due to the high tax burden. At this stage, low-income individuals are forced to spend a significant portion of their income on taxes.
According to the “Central Government Budget Realizations and Expectations” report published by the Presidency of Strategy and Budget, the percentage of VAT collected in the last six months increased by 63% and SCT increased by 96%. “If we consider that a large part of the general budget revenues are collected from taxes, the dimensions of the tax burden are revealed.” said.
Majority of the society is unaware of the taxes they pay!
Stating that most of the society is unaware of the taxes they pay, Ulaş İke continued as follows: “When we examine the developing countries, we see that taxes on consumption come to the fore. However, the fact that society is unaware of the taxes they pay causes the reality of the tax burden to be relegated to the background.
We define this situation as “fiscal anesthesia” in public finance. Financial anesthesia is the situation in which individuals are unaware that they pay taxes hidden in the price when purchasing goods and services. If we consider VAT, since the tax of a purchased product is hidden in the price, there is no awareness of how much of a burden it creates.
If the price of the purchased product had been collected separately and the VAT burden had been collected separately, it would not have been possible for us to forget the taxes we paid. We can say that our awareness here would be higher.
The fact that the share of indirect taxes in tax revenues is increasing in Turkey and therefore full tax justice cannot be achieved emerges. “As a result of this situation, the negativities in income distribution also have their share,” he concluded.