Current account deficit problem on Turkey and the role of tax incentives and taxes on foreign trade on deficit financing

Under the deficient saving constraint, in the countries who are making low value-added and low industrialized production and being dependent on raw material and intermediate good importation, governments refer to tax policies to struggle with current account deficit by the way of encouraging both savings, exports and domestic production. Besides, it is understood that, under the import substitution approach, tax policy is preferred to protect domestic industry as an effective method if it is necessary and consistent to international trade law. In this study, the current account balance and the current account deficits was examined based on balance of payments items and put forward reasons of current account deficits and mentioned the policies about struggle with current account deficits and argued the reasons and the effects of current account deficit problem in Turkey. Furthermore, it is examined the effect of the tax policy as a fiscal policy instrument to the struggle with current account deficit and examined the tax policy measures that put into effect on struggling with current account deficits at the period of 2008-2012. Key Words 1. Banalce Of Payments 2. Current Account 3. Current Account Deficits 4. Tax Policy