Taxes Turkey

The name of the value added tax (indirect tax) in Turkey is Katma Deger Vergisi, more commonly known as KDV.

In Turkey, there are different tax rates for the indirect tax collection. There is a standard rate and special rates; the first one is approximately 18% of taxable transactions. On the other hand, the special rates vary on the products: agricultural products have an indirect tax of 1%, while food stuffs, books and other publications are 8%. 

Unemployment Turkey

According to the OECD website, the government of Turkey considers unemployed those who are above 15 years of age that:

• are without work
• currently available for work
• seeking work

The calculation of unemployment consists of the following ratio: unemployed population divided by the total population.

Unemployment Rate Turkey

Turkey's Economy: Fiscal Policy

During the 1990s, the government of Turkey set a very lax fiscal policy on its economy to allow the latter to grow. They adopted an expansionary fiscal policy to stimulate the consumer spending and the investments by decreasing taxation.

By the early 2000, the government realized that a more stringent fiscal policy was needed. Thus, they agreed on establishing a monetary policy that would stabilize the prices, which had been fluctuating severely for the previous years. In other words, the inflation rates increased to a level where the government had to intervene and shift the AD curve to the left. Moreover, they also used a more rigid fiscal policy to provide sustainable public finance. However, this resulted in an economic recession: the real GDP growth rate reached its minimum levels at -5.7% in 2001.

The government therefore decided to achieve fiscal consolidation, which is a set of policies that reduce government deficit and accumulation of debt. To do this, the nation applied implicit fiscal rules to its economy: this way, the government spending decreased and the taxation increased; therefore, the government budget was restored.

TURKEY Database (Indicators)

The collection of this data enables us to analyze the relations between the different indicators that a country's economy uses. In this case, we will be looking at GDP, Unemployment Rate, and Real GDP Growth. GDP is the general indicator of a nation's production that basically tells us that country's income. There are three different methods of measuring GDP: income, expenditure, and the output approaches. Particularly, some of the components of the expenditure formula are included in this data table: government expenditure (G), investment expenditure (I) and household consumption (C). However, to calculate GDP we would still need the net exports (X-M).

This database offers the indicators provided by the government of Turkey. In this analysis the base year will be 2009. Overall, we can see an increase in the GDP (increases every year), whereas unemployment rate falls and then increases again. Real GDP growth shows a very bumpy trend, where there's no real pattern. From 2009-2010 it decreases, then in the 2010-2011 period it increases to fall again until the year 2013. Something else that helps us connect the pieces of this puzzle is the inflation rate: from 2011-2012 it decreases to rise again from 2013-2014. Inflation affects GDP and also the Real GDP growth; in 2011 and 2012 the inflation rate increases and so does the GDP. This is caused by the increase in price of the country, which boosted the nation's income as well. Unfortunately, data of the year 2013 is not included. In that same year the inflation rate decreases drastically, which may have affected the nation's GDP. When talking of Real GDP growth, we can see that it decreases when the inflation decreases, showing us the real concept of it: the indicator is basically equal to the nominal GDP divided by the GDP deflator; this makes it a more realistic measure of it. One other aspect is household consumption, which increases throughout the whole period. This shows how the people of the country have developed and how they are gaining more money to spend each year. Overall, Turkey is increasing its income, since the GDP indicator has increased year by year over the past 3 years.