Ministry's calculations fall short on taxes: 500 billion lira deficit

While curbing demand is one of the main goals in the fight against inflation within the economic program, this situation has also negatively affected tax revenues.

According to a report by Rahim Ak from HaberTürk, based on data from the Ministry of Treasury and Finance, while a total revenue target of 8 trillion 353 billion lira is set for the entirety of 2024, 7 trillion 407 billion lira of this is expected to be generated from taxes.

According to the Ministry's data, 4.3 trillion lira in taxes was expected to be collected in the first 7 months. However, 3.8 trillion lira was collected. While remaining approximately 500 billion lira behind the planned target, the paths to be followed to reach the target include increasing tax performance for the remainder of the year, introducing additional taxes to reach the target, or financing the deficit through borrowing.

78 PERCENT OF THE TARGET REACHED IN 7 MONTHS

According to the Ministry's data, since 80 percent of the accrued income tax has been collected, it is considered that the target is being approached. While declaration-based income tax collection, such as "rental tax," remains behind at 60 percent relative to accrual, 78.3 percent of the target was reached in 7 months. Since this tax is paid in installments, the possibility of the collection rate increasing towards the end of the year remains.

Specifically regarding income tax, the collection rate for those paying income tax under the simple method, such as taxi drivers and small tradespeople, remained at 7.7 percent.

A significant problem in the data is also seen in Corporate Tax. While the Ministry targets 1.2 trillion TL in corporate tax for the year, only 480 billion lira could be collected in 7 months, against a target of 744 billion. Companies did not pay, or could not pay, approximately 263 billion lira that they were required to pay.

321 BILLION LIRA IN VAT AWAITS PAYMENT

The figures also point to a problem in declaration-based VAT collection. While the collection rate for VAT collected through withholding was 84 percent, only 28 percent of the target could be collected for declaration-based VAT. While companies paid 40 percent of the 535 billion lira in accrued VAT, 321 billion lira in VAT awaits payment.

Taxes that fell due to the curbing of demand also drew attention. While the sharp rise in automobile prices and the increase in interest rates affected Special Consumption Tax (ÖTV) revenues, VAT collected at customs also lagged behind as recent regulations shifted focus toward the customs tax side. As the number of people struggling to go on vacation increased, the accommodation tax also remained far behind the target.

While 1.4 trillion lira was expected from the Special Consumption Tax (ÖTV) in 2024, it remained 75 billion lira behind the 818 billion lira tax revenue target for the first 7 months.

EXPECTATION IS 136 BILLION LIRA, ONLY 32 PERCENT COLLECTED

While increasing tax rates on alcoholic beverages negatively affected tax collection, aside from the decrease in sales, the picture is also concerning in terms of illicit and counterfeit alcohol. While the expectation for alcoholic beverages was 107 billion, 49 percent was collected in 7 months.

With the decline in real estate sales, title deed fees came in 35 billion lira lower than expected. While the Ministry collected 44 billion in title deed fees in 7 months, only 32 percent of the annual expectation of 136 billion lira could be obtained.

While this picture is being experienced in tax revenues, it was observed that the state relied heavily on fines. It is understood that the annual target for fines has been met and exceeded.