6th Global Conference on Business & Economics
ISBN : 0-9742114-6-X
Effects of Tax Amnesties in Turkey and Greece
Sinan Bastas, Northwestern University, Evanston, IL, United States
ABSTRACT
This research explores the different procedures of tax amnesties held by the Turkish and the Greek
governments and how these procedures affect the local economy. Although there might be a numerous reasons
behind the slow performance of the Turkish economy when compared to Greece, this research mainly seeks to
answer whether the not-well-structured tax amnesty programs in Turkey negatively affect the government revenue.
INTRODUCTION
Although there must be a hundred different reasons to the current gap between the Turkish and Greek
economies, I am specifically interested in the attitudes of the two countries towards their use of tax amnesties. It has
come to my attention that both Turkey and Greece have been through numerous tax amnesties over the past 30
years. Yet unlike Greece, Turkey has been struggling with the negative effects of the tax amnesty programs on its
economy. I believe that if these programs are not bundled with transparent, user friendly, solid and strict tax
structures they will bring about numerous long term problems such as the formation of an informal economy, an
increase in the number of violators – an increase in tax evasion - , and an ultimate decrease in government revenue.
That is why I consider the use of tax amenities only as a means to increase government revenue in the short term an
ill behavior which will hurt the economy badly in the future. In that regard the comparison between the Turkish and
the Greek tax amnesties will help me to test my hypothesis on the matter.
Tax Amnesty
How do governments decide to create a tax amnesty program? Are these decisions about amnesty programs
economical or political decisions? Although tax amnesty programs are very common among different countries
around the world, the literature about this topic is very rare and limited. There may be different reasons to this such
as differing tax laws, tax cultures or collection methods from one country to another. In this section, I will try to
analyze when a tax amnesty program is used and what its usual expected outcomes are.
When can we expect to see tax amnesty programs? A NBER paper written by Leonard and Zeckhauser (1986)
reveals that tax amnesties are likely to be used by the government when there are a relatively large number of
offenses committed by people or when it is difficult to enforce the penalty.
What do the governments expect from implementing a tax amnesty program? It seems easier to identify the
short term outcomes of the program, but much harder to recognize the long term effects as they vary greatly from
nation to nation. Some of the most important short term expectations after a tax amnesty seem to be an increase in
the government revenue and giving violators of the system a second chance to start with a clean record. If the tax
amnesty program is to be followed by a stricter enforcement based on a better structured, transparent and solid
taxation system, the governments will have the chance to increase the number of taxpayers while boosting up the
confidence of their citizens towards the new system. Yet, if a still complicated and uneasy tax system is to follow
the amnesty, the regular taxpayers will be discouraged and the number of tax violators will eventually increase.
LIMITATION OF THE STUDY AND FUTURE STUDIES
In this research, the data on Turkey is based on numerous critical assumptions made by the author as a
result of insufficient data. Different numbers can be used for the percent of the Turkish informal economy and the
number of firms in the informal economy. Different assumptions might create different results. In the future the
Turkish Government might decide to reveal the necessary data or sponsor a research on the matter to provide it.
When that opportunity arises, the hypothesis can be reevaluated and be modified. No matter what, this paper shall
hold a light to any other author’s research on the matter in the future.
OCTOBER 15-17, 2006
GUTMAN CONFERENCE CENTER, USA
1
6th Global Conference on Business & Economics
ISBN : 0-9742114-6-X
REFERENCES
Aflar Tarihi Raporu (Amnesty History Report), 2004, Ankara Ticaret Odasi (Ankara Chamber of Commerce)
Ahmad, Feroz (1993); The making of modern Turkey, Routledge, London
Alm, J, M. McKee and W. Beck (1990), Amazing Grace, Tax Amnesties and Compliance, National Tax Journal, 43, 23 – 37
Alm, J. and W. Beck (1993), Tax Amnesties and Compliance in the Long Run: A Time Series Analysis, National Tax Journal, 46, 53 – 70
Alm, J. and J. Martinez-Vazquez (2001), Societal Institutions and Tax Evasion in Developing and Transitional Countries, Georgia State
University International Studies Program
Bronchi, Chiara (2002), Options for Reforming the Tax System in Greece, Oecd Economics Department, JEL Classification: H2, Organization
for Economic Co-operation and Development
Country Commerce Report, 2005, Economist Intelligence Unit Website
E. Saglam, June 28, 2004, Cemil Cicek ile Soylesi (Interview with Cemil Cicek, Justice Minister), Referans Gazetesi (Reference Newspaper)
Elbet Bir Gun Af Cikar (Of Course One Day There’ll Be Amnesty), February 17, 2005, Milliyet Gazetesi (Nation Newspaper)
Enflasyon Muhasebesi Bilgilendirme Toplantisi (Inflation Adjusted Auditing Meeting by Turkish Chamber of Commerce in Trabzon), December
13, 2004, Anadolu Ajansi (Anadolu Agency)
European Union Web Page
English http://europa.eu.int/index_en.htm
G. Ercel, July 21, 2004, Mali Uyumun Kalitesi (Quality of Fiscal Policy), Dunya Gazetesi (World Newspaper)
Gizli Af: Zamanasimi Raporu (Secret Amnesty: Time-Out in Judicial Cases Report), 2004, Ankara Ticaret Odasi (Ankara Chamber of
Commerce)
Franzoni, L. A, (1998), Tax Evasion and Tax Compliance, Encyclopedia of Law and Economics.
I. Onder (2001), Kayitdisi Ekonomi ve Vergileme (Unregistered Economy and Taxation), I.U. Siyasal Bilgiler Fakultesi Dergisi (Istanbul
University Political Science Faculty Magazine), March 2001
Ivanova, N. and Wyplosz, C. (1999), Arrears: The Tide That is Drowning Russia, Russian Economic Trends, 1.
Leonard, H. B. and R. J. Zeckhauser (1986), Amnesty, Enforcement and Tax Policy, NBER Working Paper Series, No. 2096, National Bureau of
Economic Research, Cambridge
Lopez-Laborda, J. and F. Rodrigo (2003), Tax Amnesties and Income Tax Compliance: The Case of Spain, Fiscal Studies, 24, 1, 73 – 96.
McNab, R. M and Jorge Martinez-Vazquez (2000), The Tax Reform Experiment in Transitional Countries, International Seminar in Public
Economics, Tokyo
R. Gonenc, W. Leibfritz and E. Yilmaz (2005), Reforming Turkey’s Public Expenditure Management, OECD Working Papers, No. 418
O. S. Arolat, June 14, 2004, Odeyen Bir Kez Daha Kizacak (People That Pay Will Be Angry), Dunya Gazetesi (World Newspaper)
TESKOMB, April 8, 2005, Dunya Gazetesi (World Newspaper)
B. Torgler and C. A. Schaltegger, Tax Amnesty and Political Participation, Swiss Federal Tax Administration.
TUMOD Ogrenci Affina Destek (Support for Student Amnesty by TUMOD), January 8, 2005, ANKA Haber Ajansi (Anka News Agency)
Turkish Income Administration Web Page (Gelir Idaresi Baskanligi)
http://www.gib.gov.tr/index.php?id=270
Turkish Central Bank Web Page (Turkiye Cumhuriyeti Merkez Bankasi)
Turkish http://www.tcmb.gov.tr/
English http://tcmbf40.tcmb.gov.tr/fame/webfactory/evdpw/yeni/cbt-uk.html
The Complete World-Wide Tax & Finance Site
http://www.worldwide-tax.com/
The World Bank Web Site
http://www.worldbank.org/
OCTOBER 15-17, 2006
GUTMAN CONFERENCE CENTER, USA
2