The effect of taxes on distribution of income in Turkey

Abstract

This study analyzes the effects of tax system on distribution of income in Turkey. For this purpose, the geneal elements in the system, such as distribution of direct and indirect taxes; taxes on income, wealth and expenditures; effect of inflation are analyzed. The measures of degree of progression are applied to income taxation and the distribution of effective tax burden over factor income groups is analyzed. An additional discussion is made about the distribution of value-added tax biu^den as percentage of monthly disposable income. Combining the results, it is found that the tax system in Turkey redistributes income to the disadvantage of tow income individuals and working masses. A more progressive and unitary income tax structure; a low, uniform rated value-added tax scheme with a progressive reimbursement mechanism is proposed to increase tax equity even without reducing tax revenue.