18 lira out of 100 lira tax went to interest

The government began to put the entire bill of the crisis on the citizens, with the increase in the Special Consumption Tax (SCT) and the Value Added Tax (VAT), as well as the strong increases in taxes and fees. The new taxes, which will cause the price of thousands of products to rise from needle to thread, will come out of the citizens’ pockets and finance the interest burden on the budget. The money paid for interest on budget expenditures covered by the tax paid by citizens was TL 50 billion for years.

It has increased exponentially every year since 2018, when Türkiye switched to the presidential system. In the first 5 months of 2023, the interest payment made from the budget was TL 237.8 billion. This amount, corresponding to 76 percent of the TL 310.9 billion paid in all of 2022, has not yet been realized in the first five months of 2023. Last year, the ratio of interest expense on deposits Protected Currency (KKM) and tax revenue was 17.1% in 2022. In the first five months of this year, interest expense including KKM reached TL 242.3 billion, while its ratio with tax revenue, which reached TL 1 trillion 371.1 billion, increased to 17.7 percent. In other words, 17.7 TL out of 100 TL taxes collected by the state in 5 months were KKM interest and expenses.

INCREASING PAYMENTS

In 2002, when the AKP came to power, Turkey’s interest expense was TL 51.9 billion. The interest cost, which reached TL 180.9 billion in 2021, increased to TL 310.9 billion in 2022. Interest payments made from the budget during the AKP period reached TL 1,847.6 billion TL. KKM is not included in this account. KKM is included in the budget under the heading ‘Deposit and Participation Account Protection Expenses Against Exchange Rate Increases’.

KKM is seen as ‘interest expense’

Economists point out that KKM, the cost of which is shown as a non-interest expense, is “an interest expense.” TL 1.6 billion was paid for KKM in May. In the January-May period, KKM’s burden on the budget was TL 4.44 billion. Thus, the total cost has reached the level of 97.1 billion lira since March 2022. When this amount is added, the interest payments made from the budget since 2002 during the AKP period amounted to 1 trillion 944.7 billion lire.

The Central Bank will finance

The burden that will come to the budget of the Protected Currency Deposits in June will reach a gigantic size. Economists calculate that due to the rapid rise of the dollar, a foreign exchange load of TL 150 billion may occur in KKM in June. However, the economic management aims to alleviate the budget by transferring all payments from KKM to the Central Bank.

With the stock market law submitted to Parliament, the cost of the exchange difference of KKM accounts is transferred from the Treasury to the Central Bank. Thus, the Central Bank, instead of the Treasury, will pay the exchange difference caused by the 20 percent depreciation of the Turkish lira in June. It is pointed out that the Central Bank will somehow finance the budget and negatively affect inflation by generating issues.