Avdagic: Income tax brackets and SGK upper limit should be reviewed

ITO President Şekip Avdagic made evaluations on the economic agenda.

Making a statement on the reflections of the exchange rate on the markets and its impact on the business world, Avdagic said, “It is not our main priority that the exchange rate is low, high or stable. It is important that the exchange rate is parallel or close to inflation.” said.

“We experienced drastic corrections when the parallel or closeness of the inflation-exchange rate deteriorated”

“Whenever the parallel or close course of the exchange rate with inflation in our country deteriorated, the Turkish economy had to undergo drastic corrections. We have seen this in the last few years of our economy.” Avdagic said:

“While the exchange rate was actually manageable in the second half of 2021, the relationship between inflation and exchange rate increase has been broken since the second half of 2022. The exchange rate turned to a horizontal course and inflation continued to rise. In the second, third, and fourth quarters of 2022 and the first quarter of 2023, inflation increased rapidly. A very small increase in the exchange rate created a structure that made exports difficult and facilitated imports.

Whenever you press dry, you suppress exports, there is a contraction in exports, but at the same time, there is a rapid increase in imports. Because imported products are becoming attractive. In this sense, there is a loss on both sides. Right now, the correction movement has been implemented in the currency. From now on, at least, the foreign currency should carry out a process compatible with inflation after this period, if inflation will increase in the second six months until the end of the year, the exchange rate should also increase, even if there is a 1-2 point difference, it is important to act logically.”

“It is important to revise tax brackets”

Reminding that the minimum wage increased by 107 percent in 12 months in July 2023 compared to July 2022, and the CPI increase announced by the state was 40 percent in the relevant period, Avdagiç said, “So our minimum wage increased by 67 percent in real terms. We need to evaluate all regulations by making a macro impact analysis. We consider the net wage figure reasonable. However, at this point, there are three important issues within our expectation.” said.

Avdagic continued his words as follows:

“We need to make corrections in the tax revenue brackets quickly. Currently, the rate of increase in tax revenues has fallen far behind both inflation and the minimum wage increase.

In 2000, the first tranche of income tax was 22 times the minimum wage. Now in July that has dropped to 6.1 times the minimum wage. When people get the minimum wage, it should not be seen as just the minimum wage. It is necessary to see the income of all wage earners and the cost of the employer.

When we look at the point he has reached in terms of tax brackets, an employee who receives a gross wage of 60 thousand liras on January 1, gets a 35 percent increase, equal to the minimum wage, on July 1st. But his net salary in the second half of the year becomes equal to that in the first half of the year. Tax brackets come into play so quickly that even though the employee’s wages increase by 35 percent, his net income remains constant. Therefore, it is important for us to revise the tax brackets in a way that compensates for the losses of the last 10-15 years, not only taking into account the minimum wage, but especially the other tax brackets.”

Stating that another issue is the upper limit of SGK, Avdagiç said, “The upper limit of SGK was 5 times the minimum wage, then it increased to 6.5 times and then reached 7.5 times. SSI premium has now exceeded 100 thousand liras. An employee who receives a salary of approximately 100 thousand liras. The employer’s share of 14 percent from his own salary, 15.5 percent within the scope of the employer’s discount, with unemployment insurance, the total is 32.5 percent, the employee who receives 100 thousand lira pays 32 thousand 500 lira SGK money, which is an exaggerated figure. made his comment.

Avdagiç said, “The upper limit of the SSI should also be reviewed. We do not have a problem with the net figure determined in the minimum wage. We do not have any criticism about the current living conditions. On the other hand, we attach importance to three issues such as reviewing the income tax brackets and reviewing the regulations on severance pay. ” said.