How should a fair and transparent tax system be established?

The Turkish tax legislation has been in a state of constant change and flux in recent years. While legal regulations can be enacted for every new problem, taxes are also being introduced and abolished through regulations that contradict the constitution and normative taxation principles, within the framework of broad powers granted to the administration. The hierarchy of norms has been subjected to constant violation.

As a result, the Turkish tax system has transformed into a structure containing many incompatible legal articles and administrative regulations, leading to confusion in practice. Therefore, the Turkish tax system must be redesigned in a way that also considers social policies.

The prerequisite for bringing the Turkish tax system to a sustainable and healthy structure is to take into account the concerns of all parties involved in taxation. The applicability of tax legislation that is consistent with normative taxation principles depends on the behavioral patterns of the decision-making units existing within the tax system.

For this reason, it is necessary to obtain the input, demands, forecasts, and expectations of the parties involved in taxation, namely:

- The taxpayer, as both a tax payer and a voter,

- The tax administration, responsible for the fair and transparent implementation of tax laws,

- Tax auditing, responsible for overseeing the correct implementation of tax laws,

- The tax judiciary, responsible for overseeing that tax laws are applied within the framework of current legislation,

- Professionals who act as a bridge between the taxpayer and the administration.

Their participation must be ensured to gather their demands, forecasts, and expectations.

Furthermore, the level of economic development, sociological structure, psychological factors, and legal regulations outside of tax legislation must also be taken into account. It should be essential that regulations made within the framework of all these data are implemented through social consensus. Only in this case can tax resistance be minimized and tax compliance achieved.

In addition, developing impartial, effective, transparent, and legally compliant behavioral patterns for the tax administration, tax auditing, and tax judiciary, and ensuring that legislative regulations—designed to respond to the requirements of the economy—adhere strictly to the principles guaranteed by the Constitution, will reinforce tax compliance:

- Ability to pay,

- Legality,

- Legal certainty,

These principles must be included without compromise.

Another prerequisite for ensuring tax compliance is for the public to provide sufficient assurance that the funds transferred from the property of taxpayers—who are the providers of public finance requirements—to public property under the name of taxes are spent within the framework of social consensus. Otherwise, it is not seen as possible to reduce the natural resistance to taxation to acceptable levels.

Information regarding the standards under which public expenditures are made should be announced with full transparency; that is, the public should be informed about how, for what purpose, where, and on whom the money collected under the name of taxes is spent.

Raising the total level of welfare, ensuring a peaceful environment, eliminating inequality in income distribution, and implementing policies that envision a social life where individual-based rights and freedoms can be attained are only possible through the simultaneous design and implementation of policy changes regarding public revenues and public expenditures.

The new tax system, whose necessary qualities are stated above, should be structured by taking into account the following processes and criteria.

The Tax Council within the Ministry of Treasury and Finance should be structured to include all parties involved in taxation, and their opinions and suggestions should be obtained for changes to be made in the legislation.

As with the Corporate Tax Law, the relationship between other substantive tax laws should be reorganized as a whole, without ignoring their interconnections, along with the Tax Procedure Law and the Law on the Collection Procedure of Public Receivables, which are procedural laws for the implementation of these laws.

Changes in legal texts should not be aimed at solving concrete problems as is currently practiced, but should be in the nature of abstract legal norms that take into account other legal provisions related to tax laws.

In legal regulations, the principles protected by the Constitution—taxation according to financial capacity, impartiality, legality, and legal certainty—must be observed.

Compliance with international rules (EU Acquis, World Trade Agreements, OECD, etc.) should be ensured by taking into account the level of economic development and the volume of foreign trade.

The tax base should be broadened and the imbalance in income distribution should be eliminated. Respect for taxpayer rights must be observed. Administrative practices should be subject to judicial review to prevent arbitrariness. The executive branch should not be granted broad powers to introduce or abolish taxes.

Implementing changes in legislation during the current period disrupts the plans of economic decision-making units. Therefore, the principle that changes to be made should be enacted to take effect in subsequent taxation periods, in accordance with the Constitution, must be strictly adhered to.

Prof. Dr. Duran BÜLBÜL