TÜRK-İŞ sends letter on minimum wage to government and opposition! If demands are met, incomes will increase

TÜRK-İŞ President Ergün Atalay and Vice President Pevrul Kavlak sent a letter regarding tax regulations to Vice President Cevdet Yılmaz, Minister of Labor and Social Security Vedat Işıkhan, Minister of Treasury and Finance Mehmet Şimşek, and the deputy group chairmen of the parties in the Turkish Grand National Assembly (TBMM).

The letter recalled that since 2022, an amount equal to the minimum wage has been exempt from income tax, emphasizing that this regulation is insufficient to resolve injustices in the taxation of wage income.

The letter stated that the aforementioned amount, which is exempt from income tax, is added to the cumulative tax base of subsequent months, and as a result, wage incomes unfairly exceed the 15 percent tax bracket earlier, and subsequently, the 20 percent and 27 percent brackets are taxed more quickly.

The letter included the following statement: "In all exemption applications implemented in Turkey, the exempted amount is not added to the tax base, but the minimum wage exemption amount is unfairly and unjustly added to the cumulative tax base. This causes a heavy tax burden on wage incomes." and noted the following:

"The problem should be solved by repealing the provision in the 18th clause added to the first paragraph of Article 23 of the Income Tax Law, which exempts an amount equal to the minimum wage from income tax, stating: 'However, in the taxation of wage income exceeding the exemption, the income bracket amounts and rates to be used in calculating the tax shall be determined by taking into account the amounts within the scope of the exemption.'"

"TAX TARIFF RATES SHOULD BE UPDATED IN FAVOR OF EMPLOYEES"

The letter assessed that while the gross minimum wage increased 143-fold between 1999 and 2023, the first bracket of the income tax tariff was only increased 35-fold, causing a heavy tax burden on employees, and used the following expressions:

"Before and including 2010, an employee earning income through the minimum wage would never enter the second tax bracket, and the income tax rate deducted from their wage would not increase at all. As of 2011, minimum wage earners became subject to the second tax bracket. The increase in the minimum wage and the increase in the first income tax bracket did not follow a parallel course, and for this reason, minimum wage earners have had to pay income tax at a higher rate every year. While a minimum wage earner did not enter the second tax bracket at all during the year if they had no additional income until 2011, all minimum wage earners have had to enter the second tax bracket and pay tax at a higher rate since July 2021. The amount of the first tax bracket must be increased, and minimum wage earners must be prevented from entering the second tax bracket throughout the year. At this point, it is requested that the first bracket of the income tax tariff be determined above a certain amount of the annual gross minimum wage (taking into account additional earnings such as overtime, transportation, meal, and fuel allowances) as in previous years, and that other tax tariff rates be updated in favor of employees based on the first bracket."

"WAGES SHOULD BE SUBJECT TO WITHHOLDING AT A FIXED RATE"

The letter stated that many income elements, primarily wages, are taxed through withholding, and that withholding has widely turned into final taxation, adding: "However, the withholding applied only to wage income is calculated according to an increasing rate tariff, while all other incomes (interest and similar income, dividends obtained from companies, some self-employment earnings, rental income, etc.) are subject to withholding at a fixed rate. In order to make the taxation system more equitable, wages should either be subject to withholding at a fixed rate or taxed with a separate tax tariff with lower rates."

The letter also requested that employees benefit from the provision of taxation on "net earnings", which is found by deducting expenses from the gross income provided for all earnings elements, stating: "By allowing employees to deduct their basic expenses from the tax base; it is considered appropriate to ensure that all other social assistance items provided, as well as health, education, transportation, rent, and heating expenses, are excluded from the SGK premium base as much as possible and are exempt from income tax."

News Source: AA