Development of Tax Expenditures in Turkey and Its Place in Selected Public Financial Indicators

Abstract

Politicians direct the economy by using taxes for fiscal and social goals. Changes are made on taxes in line with the powers granted to the executive authority. In the framework of the Constitution, amendments made in the legislation in such ways as rates, discounts, exceptions, exemptions and incentives, and so on, will give up the public revenue to be generated. If the government's renounced the receivables it plans to collect creates a decrease in tax revenue. On the other hand, the amount of tax renounced provides a flow of resources to the private sector. Economic actors transer the non-taxed portion of the remaining money back to the economy as consumption, savings or investment. This situation causes the abandoned tax receivable to be seen as a kind of public expenditure. The part not recorded as income is included in the budget as public expenditure. Therefore, the amount of tax postponed and abandoned by the state is defined as 'tax expenditure'. In creating a transparent and accountable budget for financial discipline, it is very important to submit reports containing tax expenditure figures. In this study, the tax expenditures, are primarily focused on the application methods in our country, the way they are applied and the place in our tax legislation. In addition, the current situation is presented about the effects of tax expenditures on public financial balance. The share of tax types in tax expenditures, the share of tax expenditure types in public expenditures, the share of tax expenditure types in GDP, the share of tax expenditure types in tax revenues are given numerically. Thus, the picture of tax expenditures in our country is revealed.