Varlık Vergisi in Turkey: History and Impact

Varlık Vergisi

The term "Varlık Vergisi," which translates to "Wealth Tax," has its roots in Turkey's political history. This tax was introduced by the Republican People's Party (CHP) during the government of Prime Minister Celal Bayar. It is important to understand the historical background surrounding this tax policy to comprehend its significance within Turkey's economic landscape.

Historical Context

Introduction of the Wealth Tax

In 1953, with the establishment of the Central Bank of Turkey (Türkiye Cumhuriyet Merkez Bankası - TCMB), there were discussions regarding the implementation of a wealth tax. However, it was only after 1957 that Republic of Turkey Prime Minister Adnan Menderes issued Directive No. 8 (Eighth Directive) on April 23, 1958, implementing the Varlık Vergisi. The introduction of the Varlık Vergisi aimed to increase state revenue and address inflation caused by foreign currency speculation.

Opposition to the Wealth Tax

Despite its intent, the Varlık Vergisi faced opposition from various sectors due to concerns over its fairness and effectiveness. Socialist parties criticized the tax as regressive since it affected those with lower incomes more severely. Moreover, some argued that the tax unfairly targeted business owners who had accumulated their wealth through hard work, while wealthy landowners were exempted from paying the tax under the Kocaeli Agreement. Opponents also raised concerns over the security measures taken to collect the tax, such as the closure of schools and businesses during the tax collection process.

Notable Events and Amendments

1959 Amendment

On May 15, 1959, the Turkish Parliament passed Law 2052 amending the Varlık Vergisi, creating a new tax called the "Haber Yüzbaşısı Vergisi" or "Treasury Commissioners' Tax." This change occurred after the government decided to reduce the tax rate and expand the tax base.

Abolishment

Following the abolition of the Varlık Vergisi in the mid-1960s, the Republican People's Party replaced it with the "Vergi Tahsisatı Lisesi" or "Tax Collection Act". This marked the end of the controversial tax policy, which had been heavily debated and opposed by various groups.

Explore the history and significance of the Varlık Vergisi, also known as the Wealth Tax, introduced in Turkey during the government of Prime Minister Celal Bayar. Learn about the political context, opposition, notable events, and eventual abolishment of this tax policy.