Finance minister: 11 percent of collected taxes for interest too high
Finance Minister Naci Ağbal says at the moment 11 percent of taxes collected goes to paying off interest on the national debt, adding that this ratio is too high and should drop to around 3 percent. Ağbal recalled that approximately 85 percent of taxes collected in 2002 went to paying off interest. He reiterated that interest rates are still high, although the fact that this ratio has dropped to 11 percent today from 85 percent in 2002 is favorable.
Speaking at a meeting titled "The Evaluation of Studies and Objectives for 2016," which was organized by the Revenue Administration in Afyonkarahisar, Ağbal said the government has made significant achievements in budget discipline over the past 14 years.
Pointing out that budget deficits have declined dramatically since 2002, Ağbal said this decline can be achieved in two ways. He added, "The first is by ensuring discipline in public expenditures. In other words, it is about preventing extravagance and misuse in spending in the public field as much as necessary. From this point of view, the Justice and Development Party (AK Party) government has so far implemented a fiscal policy that ensures rationalization in public expenditures and brings a discipline to public expenditures." He also said the AK Party government will not abandon its discipline in public expenditures and will resolutely maintain this policy.
The minister said that the second way to reduce budget deficits is that collections regarding tax-free income must be absolutely made in conformity with the potential of the economy. He said: "When viewed from this aspect, the ratio of collected tax revenues to national income has soared to 20.9 percent today, from 17.2 percent in 2002. In other words, we have increased this ratio nearly 3.7 percent. As such, we could transform economic potential to public revenue - which is highly important."
Ağbal further noted that non-interest expenses stood at 19.4 percent in 2002, and these expenses in proportion to national income have risen to 23.2 percent in 2016. Underlining that the most radical change occurred in the budget deficit, Ağbal said the budget deficit plummeted to 1.3 percent in 2016 from 11.5 percent in 2002 - a ratio which is "unimaginable" for many countries. "Although budget deficits hover around 3 to 5 percent both in Organization for Economic Co-operation and Development (OECD) countries and the EU, Turkey could reduce its budget deficit to around 1 percent thanks to its tight fiscal policies and budget disciplines which have been in place over the past 14 years."
Speaking at a meeting titled "The Evaluation of Studies and Objectives for 2016," which was organized by the Revenue Administration in Afyonkarahisar, Ağbal said the government has made significant achievements in budget discipline over the past 14 years.
Pointing out that budget deficits have declined dramatically since 2002, Ağbal said this decline can be achieved in two ways. He added, "The first is by ensuring discipline in public expenditures. In other words, it is about preventing extravagance and misuse in spending in the public field as much as necessary. From this point of view, the Justice and Development Party (AK Party) government has so far implemented a fiscal policy that ensures rationalization in public expenditures and brings a discipline to public expenditures." He also said the AK Party government will not abandon its discipline in public expenditures and will resolutely maintain this policy.
The minister said that the second way to reduce budget deficits is that collections regarding tax-free income must be absolutely made in conformity with the potential of the economy. He said: "When viewed from this aspect, the ratio of collected tax revenues to national income has soared to 20.9 percent today, from 17.2 percent in 2002. In other words, we have increased this ratio nearly 3.7 percent. As such, we could transform economic potential to public revenue - which is highly important."
Ağbal further noted that non-interest expenses stood at 19.4 percent in 2002, and these expenses in proportion to national income have risen to 23.2 percent in 2016. Underlining that the most radical change occurred in the budget deficit, Ağbal said the budget deficit plummeted to 1.3 percent in 2016 from 11.5 percent in 2002 - a ratio which is "unimaginable" for many countries. "Although budget deficits hover around 3 to 5 percent both in Organization for Economic Co-operation and Development (OECD) countries and the EU, Turkey could reduce its budget deficit to around 1 percent thanks to its tight fiscal policies and budget disciplines which have been in place over the past 14 years."