A prescription for our ailing economy
Sabancı Holding CEO Mehmet Goçmen said that the steps taken domstically will not yield results unless there is a source entry from foreign funds. Of course, this view is extremely important and accurate. But the entry of foreign capital is already possible only through healthy and sustainable tax policies.
So what needs to be improved? what tax rates or costs have to be adjusted? Let’s take a look at them now:
1) Our Corporate Tax rate, which is currently 22 percent, must absolutely be lowered below 20 percent. And even as far as pos
sible, rates for developing regions should be reduced to a much lower level, and investments should be encouraged in areas with high unemployment.
2) The total cost of social security premiums, including employer cost, must definitely fall below 30 percent. The current high rates lead to increases in unemployment. I should say that I find the existing social security incentives positive. However, the decline in rates will certainly support these incentives and will provide space for both the employer and the employee.
3) The income tax rates that are deducted from the salary are 15 - 20 - 27 – 35 percent. These ratios should also be reduced. It has to be in the 10-30 percent range.
4) Provisional tax rates should be reduced from 22 percent to 15 percent, as in real persons.
5) For the purpose of increasing and encouraging exports, much lower levels should be preferred in the tax rates of the revenues obtained from exports. The privileges supplied for companies in the Free Zone should apply to all companies within Turkey. Various tax exemptions and privileges depending on the export ratio should be maintained.
These revenues that the government will give up in the short term will, of course, create a deficit in the budget. However, the improvements will help investors and entrepreneurs to produce more in the medium and long term and increase the Gross National Product, and the per capita income will increase. The economy will be revived.
These measures will reduce the tendency of tax evasion and remove it completely after a while, benefit from transparency, and most importantly, the concept of the informal economy will be removed from our lexicon. When we provide all this, there will be no need to ask whether foreign capital will come or not.