Turkey recently passed several new taxes to raise money for the government, including a significant tax on valuable property.

1. THIS IS WHAT YOU
NEED TO KNOW
ABOUT THE PUBLIC
OUTCRY OVER
TURKEY'S NEW
PROPERTY TAX
Dr. Ehsan Bayat

2. This Is What
You Need to
Know about
the Public
Outcry over
Turkey's New
Property Tax
• TheTurkish President RecepTayyip Erdogan’s
government recently submitted a 2020 draft budget to
parliament. It was passed with very few amendments
despite a significant amount of objection byTurkish
citizens.
• TheTurkish government finds itself in a difficult
position.The financial downturn that began in 2018 is
still making it quite challenging to create budgets. As a
last-ditch effort, the administration decided to enact
some tax hikes that will drive new income.
• One of the tax hikes focuses on property owners who
hold real estate worth over a certain amount.This
particular tax has received significant pushback from
people throughout the country.

3. New Taxes
as a
Solution to
Poor
Financial
Managemen
t
• Turkey currently has a budget of about 1.1 trillion lira, which is equivalent to
$185 billion. About 70 percent of this budget is designated for debt payments
and interest, as well as salaries for the 4 million public workers in the country.
Unfortunately, this means that theTurkish government does not have funds to
invest in strategies that would improve the overall economic situation in the
country.
• One of the biggest issues thatTurkey currently faces is unemployment, and the
situation is becoming quite dire. However, the government would need more
money to create programs that would drive job creation and improve everyday
circumstances for its citizens.
• Moreover, the situation inTurkey for people who have jobs is not always ideal.
Public servants have been promised a pay increase of about 4 percent.While
this may seem like a good deal, experts have estimated inflation inTurkey
throughout 2020 to total more than 8 percent.
• These issues are what have pushed Erdogan’s government to seek out new
sources of funding and why the omnibus bill inclusive of several significant tax
hikes was pushed through parliament. Some of the new taxes relate to digital
services, accommodation, and, as mentioned above, property ownership.The
new taxes were revealed to the public in early December and came into effect
at the start of the year.

4. Growing
Negative
Sentiment
among
Turkish
Citizens
• Based on the public pushback on these taxes, especially in relation to
property ownership, politicians from the Justice and Development
Party, which is currently the ruling party, have started to question
whether or not the taxes were the best move.The tax regulations
were added to the bill by Berat Albayrak, theTreasury and Finance
Minister inTurkey, as well as Erdogan’s son-in-law.
• Political leaders worried that the taxes will reflect poorly on the party
and perhaps reduce overall support for it. Furthermore, the taxes
could lead to a number of court cases if people choose not to accept
and pay the taxes.The burden for property owners is among the
most significant. They could face an additional tax of 15,000 lira on
top of the real estate taxes that are already due.
• According to the plan, houses worth more than 5 million lira but less
than 7.5 million will face a 0.3 percent tax. Homes valued more than
10 million lira will have an additional 1 percent tax. Properties in
between now face taxes between those two rates.
• Many property owners were shocked by the valuations they received
from the General Directorate of Land Registry and Cadastre, which
would put them in a higher tax bracket than they consider fair. Many
media outlets, even those that usually side with President Erdogan,
have openly criticized the tax and issued calls for repeal.

5. Legal and
Social
Opposition
to the New
Real Estate
Tax
• A number of politicians in the ruling party have also openly opposed the tax. In
fact, the tax is now being taken to the highest court in the country by the other
major party, the Republican Peoples’ Party.This party hopes to have the tax
cancelled through the court.
• At the very least, even if the court does not cancel the tax, President Erdogan
will see the reaction the people have had. Seeing this may encourage him to
either amend or repeal the law before 2021 to recover some support for his
administration.
• Tax lawyers argue that the new burden is unlawful and arbitrary since it singles
out owners of valuable residential property while allowing other people to live
without paying any additional tax.This is especially problematic when
individuals own several properties, all of which fall beneath the limit.
• The tax seems especially unfair for retirees who are living on a fixed income
and will suddenly need to pay up to 100,000 liras on a property they purchased
for financial security. Furthermore, many people have inherited properties with
high valuations and may not have the additional funds to cover the new tax.
• People may feel pressured to sell their properties and purchase something
worth less so that they do not face the tax or the fines that will come from
failing to pay them. Some people have gone so far as to claim that the new tax
oversteps protections afforded by the government on private property.
• The ruling party has already received a lot of bad press in recent months for its
poor financial decisions. Some citizens simply feel like the ruling party is paying
the price for bad governance.