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COMMENTARY: Tax Inequality Deepens in Turkey — Corporate Taxes Up 11%, Payroll Taxes Double

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Commentary  by Anka News Agency

Turkey’s fiscal data reveals a striking picture of growing tax inequality. As of April, the four-month budget deficit reached TRY 885 billion, with indirect taxes now accounting for 71% of total tax revenues — a record high.

In contrast, direct taxes from corporations, holdings, and banks have dropped below 30% of collections, highlighting a growing burden on households and wage earners.

Gambling Tax Revenue Surges

One of the most surprising contributors to this revenue boom is the Gambling Tax, levied on state-licensed betting, lottery, and gaming activities. Revenues from this segment rose 30% year-on-year, reaching TRY 16.5 billion by April 2025.

A recent presidential decree doubled tax rates on these games of chance:

  • Sports betting: from 5% to 10%

  • Horse racing: from 7% to 14%

  • Other gambling: from 10% to 20%

These hikes suggest that Turkish citizens wagered nearly TRY 300 billion in legal gambling activities in just four months — a stark reflection of economic hardship and dwindling options for financial relief.

 

ANALYSIS: Budget Deficit Still Far from Serving as a Fiscal Discipline Anchor

Indirect Taxes Dominate the Budget

Between January and April, Turkey’s total budget revenues reached TRY 3.36 trillion, of which TRY 2.81 trillion came from taxes. Of these:

  • Indirect taxes (on goods/services): 71%

  • Direct taxes (on income and profits): 29%

Nearly every spending category — from fuel to mobile phones — is heavily taxed, while wealth and profit-based taxes have faded into the background.

Employees Carry the Heaviest Burden

The imbalance is even starker when comparing year-on-year changes:

  • Corporate tax revenue (from firms, banks, holdings): up just 11%

  • Payroll tax (income tax) from employees: up 101%, surging from TRY 368 billion to TRY 737.6 billion

Despite a nationwide audit push by Treasury and Finance Minister Mehmet Şimşek, corporate tax contributions remain sluggish, while working-class taxpayers shoulder ten times the burden.

Fuel and Consumption Taxes Boost Revenues

Although VAT and Special Consumption Tax (ÖTV) rates have not increased, inflation-driven price hikes expanded the taxable base, leading to sharp rises in collection:

  • VAT (domestic + imports): TRY 1 trillion

  • ÖTV: TRY 535.4 billion, with TRY 341.3 billion from fuel and vehicles

This means fuel-related taxes alone made up nearly two-thirds of ÖTV revenue.

“Sin Taxes” Reach TRY 171.5 Billion

From January to April 2025:

  • Alcohol taxes: TRY 32 billion

  • Tobacco taxes: TRY 123 billion

  • Gambling taxes: TRY 16.5 billion
    Total “sin tax” revenue: TRY 171.5 billion

Meanwhile, the Special Communication Tax (aka “earthquake tax”) rose 66%, from TRY 8 billion to TRY 13.5 billion.

In contrast, the Real Estate Tax — targeting luxury properties — rose a mere 2.7%, from TRY 57 million to TRY 58 million.

Structural Tax Injustice Exposed

These numbers expose deep-rooted fiscal injustice in Turkey’s economic model. Despite two years of “reformist” economic policies, the government has failed to deliver tax equity.

Key questions remain:

  • Why has comprehensive tax reform been shelved?

  • Which lobby groups are resisting Minister Şimşek’s agenda?

  • Why are low-income earners paying ten times more than billion-dollar corporations?

The answers lie in plain sight — and the official budget data confirms them.

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