The effect of tax amnesties on shadow economy in Turkey

The economy, which deals with the elimination of unlimited needs with scarce resources at the highest benefit level, must consist of economic activities that will take place in accordance with the laws of the sovereign state. The economy undocumented and unrecorded in legal books and contrary to laws and regulations is called 'Shadow Economy'. Due to the definition of the shadow economy, it is an economic variable difficult to measure. However, since it has the influence on direct economic policies, various methods have been developed to measure the magnitude of the shadow economy. Among them, the method generally accepted and used for many countries is the 'Multi-Indicator-Multiple-Causes' (MIMIC). Considering the results obtained by this method, it is seen that in Turkey while the proportion of the shadow economy in 1980 was 41.99%, in 1990 it was 37.77%; while it was 31.96% in 2000, it reached 28.72% in 2016. It can be concluded that the rate of the shadow economy in our country has been declining for years, but it has the highest shadow economy ratios among the 34 OECD countries. It shows that the shadow economy is a real problem in our country. As another problem of our country, 32 times applied tax amnesty between the years 1921-2017, is criticized by scientists for its appliance frequency and it is claimed that it adversely affects tax morality and tax consciousness. In the study, the effects of tax amnesties on shadow economy in our country are investigated. The result of the study is; shadow economy has decreased by 0.34 percent in the years when the tax amnesty has not been applied, by 0.40 percent in the years when the tax amnesty has been applied rarely, and by 0.59 percent in the years when tax amnesty have been applied frequently. Another result is that when the GDP per capita increased by 1000 units, in the same period, shadow economy decreased by 1 point.