What “No Amnesty, Only Instalments” Means on the Ground

The Minister’s sentence “never an amnesty, only instalments” sounds virtuous. But the picture on the ground is far from that sentence. Because instalments and restructuring are not the same thing; for an SME the difference often lies somewhere between bankruptcy and survival.

The restructuring laws (7326, 7440 and so on) wiped out heavy late payment surcharges and updated the debt with the domestic producer price index. In instalments under Article 48 of Law No. 6183 there is no reduction at all; on top there is deferral interest of 39 percent a year. Moreover not every applicant can benefit; first you must pass the administration’s “severe hardship” ratio. A company that is wealthy on paper but has no cash in the till to pay its workers’ wages gets caught in this mechanical formula and falls straight into the spiral of e-attachment. Even if you win the right, for debts above TRY 250,000 security is compulsory at 50 percent of the excess. Where will an SME whose credit lines are exhausted find that security?

The justification “let us protect the honest taxpayer” is right in principle. But in an environment where most SMEs have no access to credit, the door is shut in the face of the honest taxpayer too.

The issue goes beyond the question of whether there is an amnesty; it lies in the design of the system. Amnesties that save the day and the rigid collection regime that squeezes the honest taxpayer are two faces of the same structural problem. What we need is a fair, structural tax reform that reduces the indirect tax burden, narrows the informal economy and offers the honest taxpayer a real shelter in a moment of crisis.

Otherwise we will keep watching the same film; first “never an amnesty” will be said, then a new restructuring law will pass through Parliament under the weight of the accumulated debt stock. And the honest taxpayer, as every time, will again be the losing side.