Can it be a product of his typical overconfidence? Or was he just in his arrogant in-front-of-cameras mood – as was reflected in election results over the past decade - much accustomed and much appreciated by the power-worshippers in Turkish society? Or does the prime minister think that most Turks ride in Porsches and the country would save a lot should they start riding Fiats?
Up until a while ago the government was “adjusting” or “updating” only the prices of some products. Mostly, those items were either imported – like gas, oil – and thus prices were very much dependant on the foreign exchange rate or products of the state economic enterprises whose manufacturing cost was affected by increase in the price of their inputs, particularly energy prices. Now, the government is not only “updating” prices of goods, but also the tax rates.
“Increased” or “hiked” or other such terms are no longer used. After all, the government had pledged only few months ago, during the election campaign, that it would not increase taxes and will not introduce new taxes. Thus, the government “is not increasing” the taxes, but instead “updating” them? Naturally, since the taxes are “adjusted,” prices of almost everything will have to be “adjusted.” The only non-adjusted figures will be the wages and salaries for people of the fixed income group, who, however, will have to “adjust” their life standards according to the “adjusted prices.” He said the “adjustments in tax rates” were necessary to avoid economic woes like those in Greece.
Yet, the chief and indeed absolute executive of the country, Prime Minister Recep Tayyip Erdo??an was of the opinion that if people opt not to ride in Porsches and – hold on – quit smoking and cut back on consumption of alcohol, they will not be affected at all from the “adjustments,” which were done by the government in a mood to “tie our donkey at a firm pole.”
Erdo??an was not making empty rhetoric that he has become an expert of but indeed, for a change, was talking right. The hikes in tax rates, particularly in the private consumption tax, or ?TV were made in anticipation of raising some 5.5 billion Turkish Liras in added tax revenue to offset the soaring current accounts deficit. Economists were long warning that the economy might enter into some very dire straits unless the country undertakes some serious moves to reduce public spending and to curb the widening current accounts deficit extravaganza in public spending. Is there any point in getting angry over press reports critical of plans to provide official cars with drivers to each of the 550 deputies? Or, regarding claims that because of a calculation “mistake,” the deputies were getting almost 3,000 liras extra per month in their salaries?
Would it make any difference at the end of the day whether the government tried to conceal the increase in tax rates by presenting them as “adjustments?” It started with sharp “adjustments” in prices of natural gas and electricity, continued with “adjustments” in tax rates and tomorrow there will be nationwide “adjustments” in prices. What will be the end product? What will Turkey achieve by increasing ?TV rates to almost 150 percent other than curtailing the purchasing power of Turks and force the economy of the country into a stagflation?
Will Turkey be able to cut down the current account deficit with such measures while continuing the extravaganza in public expenditures and let us assume that if we stop riding in a Porsche the country will be better off?
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