The underground economy: Its causes, dimensions and example of Turkey

One of the most common problems Turkey has faced so far is the application to the method of taking loans to pay other debts and to cover the gaps in the budget. There is a great influence of the unregistered economical facts on the application to cover the budget gaps with external indebtedness, in particular. The governments provided that they do not collect enough or sufficient tax for as the public finance, apply for indebtedness. Then arises the issue and question for that why the tax, in means of the public income, cannot be sufficiently collected or why the income is so less and does not meet the public expenses. The most important fact why the tax incomes are so low is that the actual fact of unregistered economy. Black economy is not an issue that is discussed only in Turkey, but is an issue in the whole world. It has become a great concept which suggestions are brought to reach solutions and ranging comments are made upon.With its widest extent, Black Economy, is the realization of economical activities with documents that either do not reflect the truth or those that are completely applied with no document which means that such actions taken are applied with privacy from the government or the persons so called payees, which leads the economy to be completely or partially take its own way, rather than remaining in legal borders.The purpose of this thesis is to first set out the actual sub construction of the black economy and then reveal to all the expansion of black economy in Turkey and then suggest proposals for the solutions of the fact. The most important part of the theory based explanations is the methods used for the evaluation of black economy. As it will be stated in this study, the most important aspect to determine black economy is to actually the point to determine the methods used in the evaluation of black economy. The methods used in such evaluation may differ from one country to another or even may differ in one country alone, which such differences may lead to the misunderstanding or result in different means and values of the actual dimension black economy has reached. The most important point here is to choose the most appropriate method to assess black economy, obtain the most correct results, define them and then try to take the most suitable precautions to avoid its growth. After the description of the methods used for evaluation, the situation of black economy seen in other countries has tried to be explained via the help of grids. I am in the opinion that the examination of the dimensions reached in other countries in means of the black economy with its cause and results, is much more appropriate than assessing the situation in Turkey just previously. The table and grids used to describe the dimensions of black economy in other countries are generally extracted from the pressed studies of F.Schneider and D.Enste. However, the estimations of the dimensions the situation has come to in Turkey shows differences from one to another. Though, in conclusion, all the estimations and comments made for the dimensions of black economy in Turkey comes to a common point stating that the situation has actually reached serious points. The reasons which lead to the growth of the black economy in Turkey and the answers to the questions of how the fact can be prevented is stated in the last part of this thesis, which actually is the major purpose of the study. Unique approaches and determinations have tried to be applied about the prevention of the black economy in Turkey and some suggestions have been brought for the solutions. As a conclusion of the study, the opinion of the existence of black economy in Turkey and its expansion from day to day with its bad influence upon the Turkish economy has been reached, but, no matter what the present situation is today, it is thought that black economy may be taken under control with the realization of some procedures such as an effective inspection, an arrangement in taxes, either applied directly or indirectly, an improvement in the distribution of incomes, a fall in the tax ratios, to provide and maintain justice in tax, development in the studies of inflation in economy and population planning.