The evaluation of tax expenditures applied on taxes collected from income in terms of the fiscal purpose of taxation in Turkey

Although the concept of tax expenditure calls for spending on the collection of taxes, it mainly refers to the tax revenues that the government forgone due to tax privileges for certain taxpayer groups for various economic, social, fiscal and administrative purposes. The concept of tax expenditure, first coined by US tax law scholar Stanley Surrey, has become an instrument of tax policy that has played an active role in realizing the economic, social and fiscal purposes of countries over time. The tax expenditure concept that emerged in the 1960s has shown up in Turkey only at the beginning of the 2000s. Reports on tax expenditures are being prepared in many countries, especially in the USA. In some countries preparation of tax expenditure reports is a legal obligation, while in some countries a tax expenditure report is prepared, although it is not a legal obligation. With the adoption of the Public Financial Management and Control Law No. 5018, the reporting of tax expenditures in Turkey has become a legal obligation under the fiscal transparency principle since 2006. Fiscal and non-fiscal purposes are taken into account in the implementation of tax, which is the main source of funding for public expenditures. The ratio of the tax income of fulfilling the public expenditure is used as a criterion in the evaluation of the fiscal purpose of the taxation. In this study, the effects of the tax expenditures actualized on income in Turkey on the fiscal purposes of the taxation were evaluated. Moreover, in order to understand the situation of Turkey against other countries, the share of the tax expenditures in the GDP and the tax revenues on the income was compared comparatively in Turkey and the selected OECD countries. KEYWORDS: Government Spending, Tax Expenditure, Taxes on Income, Fiscal Purpose of Taxation