The burden of fighting inflation once again falls on the poor

Minister of Treasury and Finance Mr. Mehmet ŞİMŞEK declared that there would be no new taxes, stating, "We will continue with tight monetary and fiscal policies." It is very significant that he made such a statement before the elections. However, when we look at the practices of the political power from the past to the present, whatever they have said has turned out to be the opposite.

The Minister of Treasury and Finance says we will continue with tight monetary and fiscal policy, but when we look at the implementation, the fiscal and economic data contradict the minister. If you are going to continue with a tight monetary policy, why has the Central Bank injected 24 billion TL into the market without backing, instead of narrowing the emission volume and withdrawing money from the market in the last two months? This means that inflation will increase even further.

If we look at the budget deficit: In the last 2 months, the budget has had a deficit of 358 billion TL. Compared to January and February of 2023, the budget deficit has increased by 400%. The non-interest deficit is 128.6 billion TL. The basic condition of a contractionary fiscal policy is a balanced budget and a non-interest surplus. From this perspective, it is clearly seen that the practices of the government and its fiscal spokesperson, the Minister of Treasury and Finance, do not match their words.

The fight against inflation has once again been left to the poor. The minister says, "We will provide loans to contractors and industrialists." This means that housing loans, vehicle loans, and consumer loans will not be given to the poor. There is money for the contractor who will build houses, and there is money for the industrialist who will produce vehicles. Then who will buy the houses and vehicles produced? It should not be forgotten that where there is no consumption, there is no production, and where there is no production, there is no growth and development. In this case, the economy will contract further in the coming days and enter a recession. This means that because there is inevitably no consumption due to the recession, inflation will naturally fall. What will happen as a result of the recession experienced with the fall in inflation? Production will fall, growth will fall, firms will go bankrupt or downsize, and unemployment will increase. More people will lose their jobs because firms are downsizing or going bankrupt. The minister says he will not increase VAT and corporate tax. The VAT rate in Turkey is already higher than in Germany, which has a per capita national income of 52,000 dollars. While the VAT rate in Germany is 19% and the Corporate Tax rate is 15%, in our country, the VAT is 20% and the Corporate Tax rate is 25%. If we compare our country with Germany, we see that both VAT and Corporate Tax are much higher in our country.

Again, the minister says we will take additional measures. He explains these as reviewing exemptions and exceptions. Actually, there is 2.2 trillion TL in tax expenditures in the 2024 budget that the state should have collected but did not. If a tight monetary and fiscal policy is to be implemented, the taxes that were given up on must be collected first. This means that the political power, and therefore the Minister of Treasury and Finance, has not collected 28 liras of every 100 liras of tax that should have been collected.

As a result, the poor will once again pay the price for the tight monetary and fiscal policy. In other words, wealth will continue to be transferred from the poor to the rich.