An Evaluation of how Fiscal Policy affects the Economy of Developing Countries



CHAPTER 2: LITERATURE REVIEWiii

Fiscal Policy in Turkeyiii

Fiscal policyv

Increasing the Degree of Redistribution in Developing Countriesix

Limitations in Developing Countriesx

Less Impact in Countries with Developed Economyx

REFERENCESxii

CHAPTER 2: LITERATURE REVIEW

Fiscal Policy in Turkey

Budget revenues of Turkey in 2012 amounted to 370.1 billion lire, and expenses are of 403.9 billion lire. The budget deficit was 33 billion 800 million liras, this is 51.5% more than in 2011. In the medium-term program of development, the country faced budget deficit and it was around 22.2 billion pounds. The ratio of the budget deficit to the amount of the country's GDP in 2012 was about 2% (Cottarelli Carlo 2012, 15 ). In the medium-term program is planned ratio of 1.7%. In 2012, the ratio of tax revenues to the amount of the national income was 25.4%. In 2011, it was at 22.2%. from the payment of income tax in 2012 it was increased compared to 2011 by 24.7%, revenues from corporate tax rose by 29.6%. while revenues from indirect “special consumption tax” increased by 12.5%. The level of tax collection in 2012 increased to $ 89.7% and in 2010 it amounted to 85.6%. Currently, Turkey has a progressive income tax. In 2012, the amount of annual taxable income was the lowest income tax of 15%, remained at 9,400 pounds (Clemens Jeffrey, Stephen 2010, 98). In 2012, the Council continued to function for controlling over the payment of taxes, created within the Ministry of Finance of Turkey, by combining several units with similar functions. Its task is to identify cases of tax evasion. The Council, international norms are used in its operations, has more than 4,800 supervisors.

During 2012, work continued on the preparation of the new draft law on taxes. A distinctive feature of the new law will be the principle of the income tax is not the amount of income and expenditure to the individual (Blanchard, Olivier &Roberto, 2002, 1329). This will be monitored all the expenses for the purchase of real estate, cars, vacations abroad, income from rental housing, the amounts in the bank accounts and purchases on credit cards. As a result, each individual will be determined by the sum of the costs, which will be the indicator of the level of the income. If the person is in a tax return will show an amount less than the calculated amount of its expenses, the computer is easy to install these differences, and the person will be either fined or pay tax on the amount of the expenses (Seidman & Laurence, 2003, 10).

In 2012, the Turkish Ministry of Finance in conjunction with the Council for the Regulation and Control of banking activities continued to work to identify the secret accounts of Turkish businesspersons in tax haven countries and offshore areas. With the found accounts will claim payment of income tax (Feldstein, Martin, & Charles, 1980, 329). In addition, the Ministry of Finance discusses the topic of Turkish contributions to the representatives of the ...