Yesterday was exactly that, with the government announcing new tax hikes and the June central government coming out.
Economists do not like indirect taxes much, as they are distortionary: Negative in terms of welfare and inequality. Moreover, in a crisis environment, they result in people cutting down on other expenditures even if you hike taxes on "necessary" items such as tobacco and fuel. But at the end of the day, more money is more money:)...
As for the IMF implications, I wouldn't try to get too much out of the last two week's measures (tax hikes, stopping being nutcases on nuts, hard wage bargaining); they could mean that the government is trying to do it alone with "cakma" (fake) fiscal measures as much as preparations for an IMF agreement.
But one for thing, my back-of-the envelope calculations reveal that the overall net effect of all the tax hikes to July and August inflation will be 0.666% (I actually found 0.6-0.7%, but I just want to continue with my old theme). So the government is helping out for the realization of my 6.66% end-year inflation, for which I am eternally grateful.
As for the budget implications, I am coming up with a 0.666%:) of GDP contribution to the 2009 budget figure after penciling in a moderate demand contraction.
Speaking of the budget, June budget figures came out yesterday, for which a table is worth more than a thousand words:
Before I go on, a couple of "teaching notes" are in order. First, it is always wise to look at real growth to judge budget performance to weed out the effect of inflation. Second, because of the many one-off large items (just look at social security and non-tax revenues, last June's huge number in the latter is the Turktelekom payment), it is usually better to do yearly or year-t0-date comparisons rather than to compare figures with the same month last year.
As fort the figures, there are quite a few observations: First, the fall in indirect taxes has slowed down considerably, hinting strongly that we have seen the bottom of the Turkish slump. And nope, it is not because of the special tax cuts, at least not directly: Because of the size of the tax cuts, automotives and durables collection is still considerably down. Second, a casual look at the figures reveals immediately that the real problem is coming from expenditures. In that sense, tax hikes will have only limited impact for putting the budget books back in order. In other words, it is the expenditures, stupid!
Economists do not like indirect taxes much, as they are distortionary: Negative in terms of welfare and inequality. Moreover, in a crisis environment, they result in people cutting down on other expenditures even if you hike taxes on "necessary" items such as tobacco and fuel. But at the end of the day, more money is more money:)...
As for the IMF implications, I wouldn't try to get too much out of the last two week's measures (tax hikes, stopping being nutcases on nuts, hard wage bargaining); they could mean that the government is trying to do it alone with "cakma" (fake) fiscal measures as much as preparations for an IMF agreement.
But one for thing, my back-of-the envelope calculations reveal that the overall net effect of all the tax hikes to July and August inflation will be 0.666% (I actually found 0.6-0.7%, but I just want to continue with my old theme). So the government is helping out for the realization of my 6.66% end-year inflation, for which I am eternally grateful.
As for the budget implications, I am coming up with a 0.666%:) of GDP contribution to the 2009 budget figure after penciling in a moderate demand contraction.
Speaking of the budget, June budget figures came out yesterday, for which a table is worth more than a thousand words:
Before I go on, a couple of "teaching notes" are in order. First, it is always wise to look at real growth to judge budget performance to weed out the effect of inflation. Second, because of the many one-off large items (just look at social security and non-tax revenues, last June's huge number in the latter is the Turktelekom payment), it is usually better to do yearly or year-t0-date comparisons rather than to compare figures with the same month last year.
As fort the figures, there are quite a few observations: First, the fall in indirect taxes has slowed down considerably, hinting strongly that we have seen the bottom of the Turkish slump. And nope, it is not because of the special tax cuts, at least not directly: Because of the size of the tax cuts, automotives and durables collection is still considerably down. Second, a casual look at the figures reveals immediately that the real problem is coming from expenditures. In that sense, tax hikes will have only limited impact for putting the budget books back in order. In other words, it is the expenditures, stupid!
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