Turkey imposes one-time earthquake tax for recovery plan

Turkey has imposed a supposedly one-time additional tax on companies to fund earthquake recovery – but some suspect the new tax will remain in place, judging by previous examples.

Turkey’s parliament on Wednesday night imposed a one-time extra 10-per-cent tax on more than 22 companies to fund the government’s earthquake recovery plan.

“After the earthquake disaster, which was the disaster of the century, which left us all in deep sorrow, a one-time additional tax was established to eliminate the conditions that negatively affect general life, to meet the urgent needs of our citizens and provide resources for the reconstruction of the region,” Mustafa Elitas, parliamentary group deputy chairman, from the ruling Justice and Development Party, AKP, said after the vote.

February 6 twin earthquakes registering 7.9 and 7.7 on the Richter scale devastated Turkey’s southern and southeastern provinces, killing more than 46,000 people and leaving millions without homes.

Elitas added that 11 provinces in the earthquake zone were exempted from the new tax that was adopted with the votes of his ruling AKP and its partner, the Nationalist Movement Party, MHP.

Observers expressed doubt about the new “one-rime” tax due to previous examples, however. After 1999 earthquakes hit the Marmara region, including Istanbul, the government introduced several “one-time” taxes – but since then the taxes have remained in effect.

One of the taxes, paid to this day by mobile phone operators and radio and TV, has brought in some 88 billion lira [some 4.6 billion US dollars]. It was also hiked to 10 per cent two years ago. But the government has never fully explained where the money has been spent.

According to a report by the Turkish Enterprise and Business Confederation, TURKONFED, the February 6 earthquakes will likely cost the economy over 80 billion US dollars, equal to about 10 per cent of GDP.