Retirement scheme criticism from Finance Minister Şimşek: Caused a big deficit

It was learned that Treasury and Finance Minister Mehmet Şimşek made a presentation at a camp attended by AKP mayors at the beginning of the week and evaluated public expenditures and the new tax regulation.

According to the information gathered, Şimşek said that the budget was deeply shaken by the February 6th earthquake and then by the EYT (People on Retirement Age), adding that new tax regulations would be implemented to increase budget revenues and that they would be in a deep struggle with the informal sector.

According to the information obtained by DW Turkish, Şimşek also mentioned his discomfort with non-payment of taxes in his presentation and shared the information that approximately 454 thousand taxpayers do not pay taxes on the grounds that they “do not earn an income” or “incur a loss”.

Şimşek said, “Among taxpayers, almost no one pays their taxes except those in the top thousand. Taxes outside the first thousand are quite symbolic. We have to fight against informality and we will do so.” Stating that there are segments such as doctors, lawyers, taxis and transportation companies among those who do not pay taxes at the rate of their earnings, Şimşek said, “We will sit at the cash register and make detailed revenue determinations at certain intervals. We will say ‘explain this’ to all those who have more than 20 percent difference between their expenditures and income.”

In response to criticism as to why the minimum wage was not raised at the meeting, Şimşek was quoted as saying that “the minimum wage was last raised by 49 percent above inflation”. Şimşek noted that for this reason and in order to fight inflation, there will be no interim increase in the minimum wage.

Şimşek, who also shared data with the participants of the AKP camp, criticized the EYT regulation and stated that the SSI system has a huge deficit due to pensions.

Şimşek said, “Premiums will be collected, salaries will be paid. This has to cover each other. However, there is a deficit close to 1.5 trillion liras. This is twice as much as all the investments we have made. Where will we find this money; we will find it by borrowing.”

According to Şimşek, 2 million 300 thousand people benefited from EYT in the first stage. and got retired< Noting that the number will reach 4 million by the end of this year and 6 million in total, Şimşek said that the burden of EYT on the budget this year alone is 742 billion liras and 1.2 trillion liras in 2025. “There are millions of people who retired at the age of 40 or even 38,” said Şimşek, “There are currently 16 million 100 thousand retirees in our country. In the past, there used to be 1 retiree for every 3.8 employees. Currently, this ratio is 1 retiree for 1.44 employees. It is almost one to one, it is not a system that can be sustained.”

Speaking at the camp before TurkStat announced annual inflation at 71 percent, Şimşek said inflation would drop to the 40s as of October. “If the program continues, inflation will drop to the 20s this time next year. By the end of 2026, we aim to reduce it to single digits,” Şimşek said, adding that they analyzed the inflation shocks experienced by 56 countries one by one.

Pointing to these countries, Şimşek said, “It took three and sometimes four years for inflation to come down to normal levels, that is, to return to single digits.” Şimşek also noted that they removed the tax advantage of KKM and that a tax will be imposed on it.

“We will not discriminate between AKP and CHP municipalities”

Noting that they are closely monitoring savings in the public sector, Şimşek said, “We are sensitive about this issue, don’t think that these savings will not bind the municipalities. It binds you 100 percent. The ministry will conduct detailed follow-up and investigation.

There will be serious sanctions for those who do not comply with the savings measures.” Şimşek added that they will not discriminate between AKP and CHP municipalities.

Referring to the efforts to tax tips and moto couriers, Şimşek said, “Relevant ministries requested this regulation. We put it in the draft. There was no additional tax regulation. The discussion was taken to different grounds. Therefore, we removed those regulations from the draft.”

Minister Şimşek said that the Central Bank reserves increased by 78 billion dollars to 140 billion dollars. On the other hand, explaining that Turkey left the “low-income countries” group in 1955 and entered the “middle-income countries” group, Şimşek said, “This year, for the first time, we will leave the ‘middle income group’ in our per capita national income and enter the ‘high-income countries’ group. The data for this will be announced in 2025.”

Some newspapers reported that Şimşek said to the municipalities at the AKP camp, “None of you obey the law. You have turned into an employment agency. Comply with the current financial rules.” Some newspapers also reported that Şimşek warned the municipalities with these words.

Regarding these news reports, the Ministry said, “The speech is a general speech covering all municipalities and his warnings are for all municipalities within this framework. The news that AK Party municipalities were targeted does not reflect the truth.”