The 'deduction' danger awaiting municipalities in the new tax package: It could rise to 100 percent...
It has been alleged that the new tax package, some articles of which were leaked to the press during the Ramadan Feast holiday, contains a regulation that could increase the deduction made from municipal budgets from 40 percent to 100 percent.
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It is alleged that the new tax package, which is expected to be submitted to Parliament in the coming days, includes a clause that would pave the way for the entire share that municipalities receive from budget revenues to be deducted against their tax and Social Security Institution (SGK) premium debts.
If the article is enacted, the upper limit of the deduction to be made from the public budget against the public debts of municipalities could rise from 40 percent to 100 percent.
THE 40 TO 60 RULE WAS BEING APPLIED
According to a report by Erdoğan Süzer from Sözcü, for the tax, SGK premium, Treasury debt, settled debts, and debts to Iller Bank of municipalities, provincial special administrations, and their affiliated companies, a maximum of 40 percent of the resources transferred from general budget revenues is currently deducted and paid to creditors.
Therefore, 60 percent of budget revenues is transferred to the indebted municipalities and institutions in any case. The 40 percent limit was specifically set to ensure that municipalities do not disrupt public services and do not experience problems in paying salaries. With the new regulation, it is envisaged that the 40 percent limit will be removed for income (withholding) tax and Value Added Tax debts, as well as SGK premium debts, and that the resulting debt will be deducted from the next month's budget transfer without being subject to any limit.
COLLECTION PLAN
It is stated that the regulation is intended to rapidly collect the debt in 3 thousand 436 municipalities and municipal companies, which totals 55.6 billion liras, a large portion of which remains from the AKP era.