Turkey Plans to Boost Depleted Coffers With Tax Changes and Debt

(Bloomberg) -- Turkey is looking at bolstering its coffers with a slew of tax amendments and a higher borrowing limit, to help cover the budget deficit as the Treasury braces for a year with a heavy debt repayment schedule.

The draft bill, submitted to parliament on Thursday, would increase the top income tax rate to 40% from 35% for individuals with annual income of over 500,000 liras ($87,000), and introduce several new levies, a lawmaker representing the ruling AK Party, Mehmet Mus, said in Ankara.

Another proposal is to lift the Treasury’s net borrowing limit by 70 billion liras in 2019, after already raising it by 5% twice to 89.2 billion liras.

The draft also authorizes President Recep Tayyip Erdogan to double the levy on interest received from foreign-currency deposits and increases taxation on top league soccer players to 20% from 15%. The government also proposed slapping an additional charge on properties valued at more than 5 million liras.

The tax changes alone are expected to add as much as 6 billion liras to the government’s revenue, AKP lawmaker Vedat Demiroz told Bloomberg.

Turkey’s budget is under strain after an economic downturn that hit tax revenue, and a spending spree during back-to-back elections. The fiscal gap stood at 85.8 billion liras through September this year, a 51% increase compared to the same period in 2018.

Looming debt repayments next year further threaten to squeeze public finances. In the first quarter alone, the Treasury plans to redeem about 75 billion liras of local-currency debt, a record figure for the period in data going back to 2005.

©2019 Bloomberg L.P.

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