The debate on the "tax exemption" on the minimum wage continues. The Bill of Law on Amending the Income Tax Law and Some Laws, signed by Justice and Development Party (AKP) deputies, is presented to the Presidency of the Grand National Assembly of Turkey (TBMM) last week and discussed in the Plan and Budget Committee yesterday.
MINISTER SAID "ALL FEES"
Vedat Bilgin, Minister of Labor and Social Security, noted that after the announcement of the new minimum wage, the part of all wages equal to the minimum wage will be exempt from Income Tax. Bilgin by using the following expressions: “The minimum wage is determined by the joint agreement of the worker, employer and the state, which is the triple pillar of working life. Net minimum wage increased by more than 50 percent compared to the previous year. With a historical agreement, a structural transformation is achieved as a requirement of being a social state. Income and stamp taxes have been removed from the wages of all workers up to the minimum wage” he said.
ONLY THE MINIMUM WAGE IS INCLUDED IN THE BILL
However, the 13-item proposal contradicted the minister's statements. The decision that all wages will benefit from the Income Tax exemption is not found. In the second article in the proposal, the expressions "Wages of those who work at minimum wage and whose wages and fees regarded as wages do not exceed the monthly gross minimum wage" will be exempted from Income and Stamp Tax only for those with minimum wages, and other wages will be subject to tax.
REDUCTION FEES WILL BE SUPPORTED THROUGH ‘AGI’
With the enactment of the proposal, only employees with a gross wage of less than 5,004 Turkish Liras (TL) will be able to benefit from the Income Tax exemption. Those who work above this wage will continue to pay Income Tax. A part of the tax will be returned to them via subsistence allowance (AGI). Those whose net wages fall below 4,253 TL due to the tax they pay will be given additional ‘AGI’, ensuring that none of the employees receive wages below the minimum wage.
OPPOSITION REACTS
This confusing proposal of the government caused controversy in the commission. Representatives of opposition parties object to this article, they want government to abide the statement made by Minister Bilgin and demanded that all wages be exempt from tax as much as the minimum wage. Government representatives, on the other hand, reacted the opposition, saying that in such a case there would be a great loss in the budget.
DOOR OPENED TO OFFICIAL INFORMALITY
The representatives of the opposition, stating that the government will not make any changes in the bill, noted that the ‘AGI’ practice, which has been removed from the working life agenda, will be continued. Stating that this proposal will also increase the number of minimum wage earners, the opposition said, “We will no longer be able to see real figures on the payrolls. A kind of official informality will begin to be experienced in our working life," and called for the proposal to be revised.