Distributional Impacts of Tax Policies During the Financial Crisis: 2004-2009

The global financial crisis which hit first US economy has been seriously affecting the Turkish economy since the final quarter of 2008. The AKP government employed the fiscal policies which were aiming to ease the negative impacts of the financial crisis and support effective demand to exit from the financial crisis. This work tries to examine the distributional impacts of indirect tax policies during the financial crisis in Turkey with the comparison of findings for 2004. The results show that from 2004 to 2009 the regresivity of indirect taxes increased. Reductions in Value Added Tax and Private Consumption Tax in 2009 to increase effective demand seem to be utilised mostly by higher income groups implying increased regressive impact.