The Analysis of Tax Burden on Wage Income

Considering the ratio of total tax revenues to GDP, excluding social security contributions, Turkey has the highest increase in the tax burden. Despite the high-rise in overall tax burden, Turkey still lags behind the EU countries. Tax burden in Turkey is heavy on production and employment with respect to wage income and this situation hinders the new investments, spread outs the informal economy and weakens economic competitiveness and employment growth. On the other hand, the tax exceptions and exemptions for wages paid to public employees leads to differentiation of the tax burden on wages between workers employed in private sector and in public sector. It is hard to say that this differentiation is consistent with the constitutional principles of taxation.