In line with promises made during the run up to the November 1st election, Turkey is indeed raising the minimum working wage from 1000 TL to 1300 TL per month from this January. Great you make think, and about time. But the sting in the tail is the announcement of tax hikes of 5.8 percent across the board from January.
Minimum wage to increase
The minimum wage increase has been a hot topic now for many months. Its implementation the result of many heated discussions between the government, politicians and the business world saying they will struggle to address the changes in the private sector ultimately leading to job losses. This raise in wages is expected to cost the private sector employers in the region of $9.2 billion (20 million Turkish liras). In an attempt to ease the burden, according to Hurriyet, the government have said they will give employers 110 lira towards each employee made possible thanks to social security premiums covered by the Turkish Treasury. It went on to say that out of this 110 liras, 99 will be taxed effectively leaving just 11 lira to help ease the burden. As the Hurriyet says, “these taxes will increase in October unless current tax regulations are effective, when income tax for minimum wage earners will rise to 156 liras, leading to 70 liras of decline in wage“. Reportedly, Suleyman Soylu the Labour and Social Security Minister has said that there is a monitoring program in place to attempt to keep minimum wage the same but in reality economists and critics are doubtful.
Rise in taxes in Turkey
Get your wallets out and brace for a rise in taxes on alcohol, cigarettes, electricity and mobile phones. According to the Official Gazette and Hurriyet last week, to mark the New Year, the minimum fixed tax on tobacco products will increase by 5.1 percent to 4.42 lira and fixed tax by 25 percent (0.25tl). Beer tax will rise by 0.18 liras to 1.03 lira, and minimum tax on two litres of the national drink Raki hiked by 23 liras to 130.68 liras.
Electric, already expensive, also sees an increase of 5.8 percent. In addition, a new tax will be applied to mobile phone sales expecting to raise the minimum prices by 30 percent to 160 liras.
Effects on daily life.
The tax system in Turkey is lopsided, very much favouring the wealthy. Critics and economists are saying only a small amount of income tax is gathered from the wealthy, the majority from indirect taxes. Those on low wages spend the majority of their income on daily living and consumption. The rise in taxes will undoubtedly affect their daily lives and result in greater social inequality. Critics expect there to be a further rise in bootlegged alcohol and counterfeit or smuggled cigarettes. From now on do be extremely careful what you are drinking, especially in places promoting very cheap cocktails or spirits. The police have seized thousands of litres of bootleg alcohol over recent years including some in resorts around the Fethiye area. These spirits can be lethal. In 2015 alone government statistics show 44 people died as a direct result of poisoning from bootleg alcohol.
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