Turkey’s budget gap stood at TRL 68.1 billion through August this year, a 34 per cent increase compared to the same period in 2018.
Sunday 13, October 2019
Turkey plans to raise income tax rates on top-bracket earners, the latest effort by the government to temper fiscal pressures, reported Bloomberg.
Individuals who make TRL 1 million ($171,000) or more will be subject to a 45 per cent income tax rate, while those earning TRL 500,000 to TRL 1 million will pay 40 per cent.
The tax rate for both income brackets is currently 35 per cent.
The government is not planning on raising the tax rate on lowest-income earners and the draft bill also introduces a capital gains tax.
The initiative comes ahead of a heavy debt repayment schedule next year that threatens to strain government finances. In the first quarter alone, the Treasury plans to redeem about TRL 75 billion of local-currency debt, a record figure for the period in data going back to 2005.
The fiscal stress comes amid an economic downturn last year that hit tax revenue, and a spending spree amid back-to-back elections. Earlier this year, the government received a 40 billion lira payment from the central bank, a one-off cash injection to help finance its needs.
When central bank cash transfers are excluded, the government posted a deficit in seven out of the eight months.