Osman Şenkul
Although the ancient Greeks contributed many inventions to the modern world, there is one thing we certainly did not borrow from them: their tax systems. In the ancient city-state of Athens, the tax system was based on the “leitourgia” or “liturgy” system, meaning “public service”. It may be difficult to imagine this amidst what we experience today; however, in ancient Athens, the wealthiest competed to pay the highest taxes, and the poor were treated to festivals and performances organised with this tax money.
In this ancient system, the wealthiest Athenian citizens and foreign residents (metoikoi) were obliged to finance public programmes through the leitourgia system. The state selected certain individuals (gumnasiarkhai) to finance and maintain public gymnasiums. Sponsors (khoregoi) financed the training of theatre choirs, while trierarkhoi financed warships and their crews. Occasionally, a special tax called eisforá was levied; according to records, in the 4th century BC, Athens’ wealthiest citizens paid this tax annually. There were also some exceptions, such as the Peloponnesian War; during this war, all Athenians were obliged to contribute as much as possible to the eisphora for the soldiers’ wages.
The beauty of the liturgical system was that public affairs tended to be financed and managed not by less accountable civil servants, but by individuals with relevant expertise. These positions carried great prestige, and although it is not entirely clear how they were appointed, it is known that the wealthy viewed the entire process as an informal Olympic ‘competition’ in which they vied with each other to see who could make the largest donation to attain a higher status.
Consequently, several hundred wealthy Athenians (some sources state three hundred) voluntarily paid the vast majority of taxes; however, they did not pay these directly to the state. Instead, they ensured that the services needed by the community were provided and were respected as major donors and sponsors by paying taxes directly to the programmes that created and maintained these services. In other words, a wealthy Athenian had to prove his wealth through his actions and was respected by his fellow citizens for doing so. Therefore, avoiding paying taxes was not only shameful but also an action that would diminish one’s public image and standing in Athenian society.
Of course, the theory behind ancient Athens’ taxation system was much deeper. The wise Athenians who proposed this idea were not concerned that wealthy citizens would gain bragging rights by paying city taxes; rather, they wanted to ensure that the wealthy would not seek “tax havens” to avoid paying taxes, as they do today. Another factor was that the ancient Greeks viewed wealth as a matter of chance. In ancient Athens, which lacked an organised industry and a capitalist economy producing large numbers of millionaires, wealth was generally passed down through inheritance.
In this way, aristocrats were under constant pressure to prove the value of their inheritance through what they did for their cities. At the same time, because they were born rich, they had to show their gratitude to the gods and help those born poor. Furthermore, the quality of the services they provided also affected their reputation.
These practices in ancient Greek city-states, which introduced the world to the tax system, must have been largely based on ‘justice,’ as virtually all subsequent societies adopted them and carried them forward to the present day. However, with the diversification of social systems, the entire world has witnessed significant distortions in ‘tax justice’ within these systems.
For example, let us look at what is happening today in the lands where these pioneering systems were implemented. According to the Organisation for Economic Co-operation and Development (OECD) report ‘Revenue Statistics 2024’, Turkey’s tax-to-GDP ratio was 23.5 per cent in 2023, while the OECD average for the same period was 33.9 per cent. In other words, Turkey is collecting tax revenue well below the OECD average.
This difference indicates that Turkey has a relatively lower tax base to finance public expenditure and is not fully utilising its potential for tax collection.
Furthermore, and more importantly, indirect taxes account for a very high proportion of tax revenues in Turkey. Calculations based on the data show that approximately 70 per cent of total tax revenues come from indirect taxes (VAT, excise duties, etc.).
However, looking again at the OECD average, the share of indirect taxes in total tax revenues is not as high as in Turkey: on average across the OECD, taxes on goods and services (VAT + other consumption taxes) account for around 30-35% of total tax revenues.
Therefore, consumption taxes (“indirect taxes”) play a more prominent role in Turkey both in absolute and proportional terms — which means a more disproportionate burden on lower income groups. Furthermore, according to the OECD’s ‘Taxation of Wages 2025’ report, the total tax-insurance burden (taxes + social contributions) applied to workers’ wages was measured at 39 per cent in Turkey. The OECD average is around 34.9 per cent.
This means that tax revenues ‘deducted’ from the theoretically expected tax burden constitute a large volume and, according to the OECD’s definition, ‘This narrows the tax base and allows particularly powerful actors to gain an advantage.’
Turkey ranks higher within the OECD in terms of the burden applied to workers’ wages; this situation may have negative effects on labour force participation, motivation and public perception.
Did you say tax justice?
As we mentioned above, the bulk of taxes in Turkey is collected in the form of VAT and similar indirect taxes paid by minimum wage earners and those who pay minimum wages to thousands of people when they buy water or bread. In other words, these taxes, which constitute a significant portion of total tax revenues, are the area where those living at the bottom and top of the enormous income gap experience ‘complete equality’.
A “small” inequality here is reflected in the results of the latest research: According to this, the share of total income received by the top 20 per cent of households with the highest equivalent disposable income per capita decreased to 48.1 per cent, while the share received by the bottom 20 per cent of households with the lowest income was 6.3 per cent.
CHP Karabük MP Cevdet Akay, in a speech he delivered at the Turkish Grand National Assembly during the week, defined the aforementioned ‘tax injustice’ as follows: “In the first nine months of the year, our citizens paid 328,763 TL per second, 19 million 726 thousand TL per minute, 1 billion 184 million TL per hour, 28 billion 405 million TL per day, 198 billion 836 million TL per week, 861 billion 501 million TL per month, totalling 7 trillion 753 billion 506 million TL in taxes over nine months.”
The Gini coefficient, a measure of income inequality, has also deteriorated over the past 10 years. According to official data, the Gini coefficient, which was 0.397 in 2014, rose to 0.413 in 2023. The Gini coefficient indicates an improvement in income distribution as it approaches zero and a deterioration in income distribution as it approaches one.
What is the Gini coefficient?
The Gini coefficient calculation uses household disposable income, which is the total annual income earned by households and individuals, minus taxes paid during the income reference period and regular transfers made to other households or individuals.
The Gini coefficient excluding social transfers rose from 0.454 to 0.476 between 2014 and 2023. This shows that social transfers have not been effective in improving income distribution.
The share of the third 20 per cent in the middle of the income brackets representing the middle class also declined from 15.2 per cent to 14.6 per cent over the last 10 years.
While income inequality in Turkey has continued to worsen over the last 10 years, there are question marks over whether Turkey’s leading wealthy individuals are included in income surveys. Economists say, ‘We see the official picture as blurred.’
According to income distribution statistics released by the Turkish Statistical Institute (TÜİK), the richest 5% of the population in Turkey received 23.1% of total income in 2023. In contrast, the poorest 5% received 1%.
While the richest 20% of the population earned almost half of the total income, the poorest 20% received only 6%, and the middle class received 14%.
According to the data, there is an approximately eightfold difference between the income earned by the richest 20% and that earned by the poorest 20%. The richest 10% earn 13 times more than the poorest 10%.
Economist Hayri Kozanoğlu, like many in the academic world, stated that the fundamental way to prevent tax injustice is to tax wealth, pointing out that such taxes are very low in Turkey and that limited taxes are levied on the income of large companies. He emphasised that, to prevent tax injustice, tax exemptions must first be limited:
“There is a claim, particularly propagated by market-oriented economists, that when we talk about taxing wealth, it gives the false impression that people who own a house or a car will be taxed. However, a wealth tax is a tax that can be levied on the wealth of an individual or a family, calculated based on their investments in the stock market, investments in foreign financial assets, facilities such as factories, all their real estate, antiques, jewellery and other valuable assets, but also taking into account their debts. Naturally, calculating and implementing this is not very easy, but there are methods for doing so. However, applying it at a very high rate and all at once does not actually ensure wealth justice. It is necessary to ensure that it is paid over time.”
When we examine this system under specific headings, the following picture emerges:
- Shortfall in tax revenue collection
Turkey operates with a tax-to-GDP ratio well below the OECD average; this creates pressure on the financing of public services.
- Shift of the burden to consumption taxes
This proportional shift in the tax structure increases the burden on those with low income levels, as they spend a large portion of their income.
- Wide range of exemptions and tax expenditures
Exemptions and allowances deepen inequalities in the system — while some groups find ways to avoid taxation, others bear the burden alone.
- Tax burden on the working population
Turkey ranks higher than the OECD average in terms of the tax burden on workers’ wages; this can have negative effects on labour force participation, motivation and public perception.
In the first nine months of the year, income tax collection exceeded the target by 91 per cent, while corporate tax only achieved 52 per cent of the target.
Of the 2.129 trillion TL in income tax collection forecast for 2025, 1.947 trillion TL was collected by the Treasury in the first nine months of the year. The increase in income tax collection compared to the same period last year was recorded at 91.57%.
While 92 per cent of income tax is collected through withholding, approximately 70 per cent of this is deducted from employees’ salaries. This shows that workers finance the most critical revenue item in the budget. The increase in withholding rates on deposit interest income also contributed to the increase.
In contrast, the picture for corporate tax is rather weak. Although the target was 1 trillion 636 billion TL in collections, only about half, or 52.54%, was collected in the first nine months. When income and corporate taxes are considered together, it is noteworthy that the taxes that employers should pay are being offset by employees.
Between January and September, income tax deducted from salaried employees amounted to approximately 1.25 trillion TL, while all corporate taxpayers paid only 860 billion TL. This picture shows that the burden of companies that do not pay tax due to economic conditions or informality falls on workers.
Withholding tax means that tax is deducted before the income reaches the person who earned it. For example, income tax is deducted from salaries, and tax is deducted from bank interest. According to tax expert Mahmut Aydoğmuş, who emphasises that a large portion of income tax, 92 per cent, is collected through withholding tax, the distribution of this 92 per cent is as follows:
- 70 per cent comes from payroll taxes deducted from employees’ salaries
- 30 per cent comes from other withholding taxes, such as profit shares and deposit interest
In other words, the vast majority of the revenue collected by the Treasury through withholding tax comes directly from workers’ salaries.
When we line up all these points one after another, we see that we are faced with a picture showing that we have one of the most unjust tax systems on earth today, in the very lands where taxation originated. The heavy burden of inflation, which imposes the harsh living conditions resulting from this injustice, is also clearly due to the unfair side prevailing, as we saw in the dilemma we discussed last week: “Should we give up VAT or the fight against inflation?”
Among them, approximately 70 international civil society organisations, including Greenpeace, 350, the African Climate and Health Alliance, the International Centre for Corporate Tax Accountability, the Climate Action Network, the European Climate Bureau, and the Centre for Economic and Social Rights, along with hundreds of activists, are members of Tax the Super Rich: A Movement for a Greener & Fairer World. Given the situation in Turkey, it seems there is no other solution but to heed this call and take action:
“We are living in a time of increasing global inequality. While the super-rich grow ever richer, climate, social and inequality crises are squeezing the rest of the planet, trapping millions of people in poverty. But there is a solution. Taxing the world’s super-rich could reverse extreme inequality and free up the trillions of dollars needed to invest in a better future for people and the planet. People are demanding this change, and governments are beginning to listen. That is why we are launching a global movement to demand higher taxes on the super-rich and to call on leaders everywhere to take bold and decisive action—before it is too late.”