Analysis of the effects of public fiscal charges and obligations on banking sector

Banking sector, while performing their functions by providing fiscal tools that the economic units are in need of, face with public fiscal charges and obligations. These fiscal weights and obligations, are saddled through both related laws and public bodies authorized by the state.The study aims to reveal with numerical facts the public fiscal charges encountered by deposit banks. Yet, accurate fiscal data that could not be found due to missing and disorganized data flows created a problem. However, public fiscal charges calculated as a result of the ratios of sectoral financial tables and transactions are verified through tests for reflecting volumes of public fiscal burdens as close as the actual rates.The study, examines comprehensively the public fiscal charges imposed between 1998-2008 on deposit banks that has an important percentage among banking sector in accordance with types of public income, public fiscal burden, incidence, economic and central administration budget income and sectoral balance sheets.In view of the scope of the economic functions performed by deposit banks regarding public fiscal weights between the period 1998-2008, their contribution to the central state budget revenues increased nominally despite the fact that their proportional contribution decreased. In certain income types, despite banks were the original attendee of public fiscal charge, they incidenced even a bigger amount of burden to firms and households. On the other hand, another important issue is the decrease in public income types that banks act as intermediaries and their ratio in gross domestic product as well as central state budget cumulative revenue.From these angles, decreasing importance of deposit banking is an issue that needs to be scrutinized. There exist several reasons for this decreasing importance. First is the strong pressure of the banking sector lobby in Turkey. Second is the increase in the amount of revenues of various income groups within general budget as the percentage of deposit banks decline and the increase in the number and quality of economic units contributing to the general budget income groups within a thriving economy. Third is the increase in number and volume of substitute institutions that provide the same services as banks or in other words, externalization effect as a result of the increase in competitors providing the same services. Fourth is the decline in the public share of revenue that public income authority would receive depending on the declining interest rates due to the impact of macroeconomic conditions. Fifth and the final reason is broadening the scope of exemptions and exceptions by banks in favor of firms and households and the reductions in tax rates.