Turkey: Early Election Knocked on the Door

In May, the Treasury cash balance showed a record surplus of 149 billion liras. The rise in banks’ corporate taxes, as well as other taxes, resulted in increased income, Central Bank transfers, VAT (Value-Added Tax), and tax collection. The pace of borrowing, combined with increased salaries, has fueled thoughts about the early stages of the upcoming election.

The surplus of 149 billion liras in May, is an intriguing predicament in the Treasury cash balance, which has been consistent since the beginning of 2022 but has now taken on a new dimension (İnanc and Yaşar). Thus overall high income has been achieved due to the Central Bank transfers, rapid VAT, and other tax collections that came about as a result of a surge in card shopping, bank corporation tax rises, and other tax increases.

The second signal to accelerate or slow high-income spending had been the budget realizations in May (SELVİ). The Treasury’s increased borrowing, paired with higher receipts, has spurred speculation that an election could be called in 2022, instead of the scheduled year, 2023.

In comparison to the previous year, Treasury revenues climbed by 111.06 percent according to the Treasury cash balance (Hazinedeki Rekor Fazla ‘Erken Seçim’ Söylentilerini Artırdı). As a last year’s revenue of 526.4 million TL in January-May paled in comparison to this year’s revenue, a total of 1.111 trillion TL (Hazinedeki Rekor Fazla ‘Erken Seçim’ Söylentilerini Artırdı). Surprisingly, the year-end revenue for 2022 was anticipated to be 1.4726 trillion TL in the budget; this implies that a significant portion of the annual projected revenue has already been achieved in the first half of the year.

Apart from the inflationary effect, substantial income collection has also contributed significantly to the increase in revenue. In comparison to the year-end income prediction as of May, 69.9 percent in income tax, 67.4 percent in corporation tax, 79.7 percent in valuable housing tax, 59.6 percent in VAT withholding, and fuel SCT have a very high realization level. It was possible to reach a 71.7 percent realization rate. On the other hand, the revenues of comparison Purposes and public banks were 185.4 percent higher than the year-end revenue objective. (İnanc and Yaşar).

Observers speculate that, despite the Treasury’s large income and cash surplus, the rapid growth in expenditure and borrowing may be related to a desire to spend quickly if an election is held in 2022 (Hazinedeki Rekor Fazla ‘Erken Seçim’ Söylentilerini Artırdı). On the other hand, it should be emphasized that the global economic crisis, which has been growing in weight and intensity in recent months, will continue to pressure Turkey’s own economy, and that the current budget scenario can be used to mitigate the impact.

Work Cited:

Gazetesi, Birgün. “Hazinedeki Rekor Fazla ‘Erken Seçim’ Söylentilerini Artırdı.” Birgun.net, Birgün Gazetesi, 10 June 2022, https://www.birgun.net/haber/hazinedeki-rekor-fazla-erken-secim-soylentilerini-artirdi-391252

İnanc:, Ethem, and Ali Yaşar: “Erken Seçim Olacak Mı? Cumhurbaşkanı Erdoğan Tartışmalara Son Noktayı Koydu.” Son Dakika, 9 June 2022, https://www.sondakika.com/politika/haber-erken-secim-olacak-mi-cumhurbaskani-erdogan-1500487

“Rekor Fazla, ‘Erken Seçim’I Çağrıştırdı.” Dünya Gazetesi, https://www.dunya.com/ekonomi/rekor-fazla-erken-secimi-cagristirdi-haberi-660443.

SELVİ, Abdulkadir. “Erdoğan Kasımda Erken Seçim Için Ne Dedi.” Hürriyet Ana Sayfa,https://www.hurriyet.com.tr/yazarlar/abdulkadir-selvi/erdogan-kasimda-erken-secim-icin-ne-dedi-42073778.

Sevinç, Murat, et al. “Rekor Fazla, ‘Erken Seçim’I Çağrıştırdı.” Diken, 10 June 2022, https://www.diken.com.tr/rekor-fazla-erken-secimi-cagristirdi/.