Impacts of the tax system on poverty and social exclusion: A case study on Turkey

Abstract

This article makes use of two different data sets on Turkey to explore the relationship between the tax structure and issues such as democratic representation, citizenship rights, and poverty and social exclusion. The first of these data sets is the extensive Household Consumption Survey (2003) by the Turkish Statistical Institute (TURKSTAT). This extensive survey data allows a very comprehensive quantitative analysis of the tax burden on the consumption baskets of households in different income groups, as well as in different regions of Turkey, The second data set incorporates qualitative data on Turkish citizens' views and attitudes towards different aspects of the Turkish tax system-such as its fairness (justice), transparency, and efficiency in generating funds for public activities-obtained through focus group meetings and in-depth interviews conducted with citizen groups and various stakeholders in cities in different regions in Turkey. The quantitative findings presented in the study clearly reveal that, if anything, taxes are expected to exacerbate the problem of inequality and poverty in Turkey. Heavily relying on regressive consumption taxes results in the poor paying a disproportionate amount of their income as indirect taxes, more so for those in Eastern and Southeastern Anatolia where poverty is more extreme. On the other hand, the qualitative part reveals that ordinary citizens find the current tax system highly unfair and feel that they receive very little in terms of public services in return for the taxes they pay. In spite of the merits attributed in theory to taxation as a means to provide services and thereby legitimize the state, the payment of taxes is met with considerable reluctance. Most of this reluctance is attributable to factors such as the citizens' inability to pay, and a lack of clarity with respect to the obligations and reasons for paying. It also emerges that the unwillingness to pay is a protest against the degradation of public services and the perceptions of unfairness, corruption, and other administrative failings.