Mehmet Şimşek: We will expand the tax base and combat the informal economy

Treasury and Finance Minister Mehmet Şimşek made important statements at the Istanbul Chamber of Industry's (İSO) regular January meeting.

Emphasizing the Medium-Term Program (OVP), Şimşek said, "This program will be implemented with patience and determination. This program is a program with political ownership. This program is not a temporary whim."

Regarding the issue of inflation, Şimşek commented, "We will not reinvent the wheel," adding, "We are doing exactly what the Fed and the EU did to bring down inflation."

Speaking about tax policies, Şimşek said, "We will expand the tax base. We will make efforts in areas where taxes are not being collected properly."

Touching upon the budget deficit, Şimşek stated that there is a budget deficit caused by the earthquake and that they aim to bring the total deficit below 3 percent in 2025 and 2026.

Highlights from Şimşek's statements are as follows:

"Price stability is necessary for resources to be effectively channeled into qualified industry and productive areas instead of speculative ones. Last year, due to the demand of our citizens, Turkey imported 29.9 billion dollars worth of gold. It is not something to be eaten or drunk. Is this the effective use of resources? No. It has been seen as a tool to protect against inflation. For high growth, inflation must be low.

Our disinflation program is simple. We are doing exactly what the Fed, the EU, Brazil, and Mexico did to bring down inflation. There is monetary tightening. There is no tension between growth and inflation. It is short-term; there is no permanent tension. For high growth, inflation must be low. The main unstable growth occurs during periods of high inflation.

This program is a program with political ownership. It was prepared by a team under the leadership of our President. This program is not a temporary whim.

"THE BUDGET DEFICIT MUST BE KEPT AT A REASONABLE LEVEL"

Why is fiscal discipline necessary? Firstly, for price stability, the budget balance and the budget deficit must be kept at a reasonable level. We will continue to limit the budget deficit to support disinflation.

"THE EARTHQUAKE IS A TEMPORARY SHOCK"

Excluding the earthquake, the budget deficit last year was 1.7 percent. Last year, the average ratio of budget deficit to national income in developing countries was 5.5 percent. In Turkey, it is 1.7 percent. The earthquake is a temporary shock. This shock will be with us for a while. But it is a temporary shock, not a permanent one.

We need to allocate resources for structural transformation. It is easy to say digital and green transformation. If you do not allocate resources to these, it is difficult to achieve them. Therefore, fiscal discipline is important. Financial resources are needed to reduce disaster risk. One of the prerequisites for accessing financing at more reasonable costs and achieving higher credit ratings is fiscal discipline. Establishing fiscal discipline is also important in terms of sustainable domestic debt and intergenerational justice, that is, who will pay the bill, and in terms of this balance and justice.

We will expand the tax base. That is, we will make efforts in areas where taxes are not currently being collected properly. There is intense work going on right now.

The increase in the budget deficit is primarily due to the earthquake. We will likely do our best to close 2024 with a deficit below what we projected in the OVP. We plan to bring the total deficit below 3 percent in 2025 and 2026."