Ankara - TEPAV declared that by the recent decisions duty losses are booked less then they actually are, additional financing costs arose and fiscal transparency is adversely affected. The Fiscal Monitoring Report - Budget Realizations February 2007 which has been prepared by the Economic Stability Institute of Turkish Economy Policies Research Foundation (TEPAV) has been published which covers developments in fiscal legislation. It is expressed in the report that, as was the case in recent years, Turkish Coal Administration (TKİ) was put in charge of procurement and distribution of coal for the coal grant to poor families by the decree of council of ministers which was published in March. In the report it is stated that the coal grant which has been/will be distributed to poor families in 2007 will be paid for by the Undersecretariat of Treasury from the allocation which will be put in the 2008 budget and it is set that there will be advance payments against this account in 2007. The report says: "Because this practice has been being done this way every year, the transaction is reflected in budget accounts with a delay, which in turn can cause a difference in the duty losses incurred amounting to the corresponding fiscal difference. In addition, it is observed that the payments made by the Treasury to the institution happen to be less than the total cost in some years and thus the duty loss is accrued less than it actually is. When the duty loss is not fully paid for, TKİ has to take on debt from the banks and it incurs an additional financing cost. In this case, the duty loss is being booked in the budget less than it actually is and an additional financing cost is incurred by TKİ corresponding to the amount of debt taken on. As a matter of fact, the institution's debt to a bank at the end of 2005 was 54 billion YTL whereas its receivables from the Treasury were 75 billion YTL."
In the report which is stated that the best course of action would be to pay for the duty loss in the year which is occurs via an advance allocation which will be put into the budget in accordance with generally accepted fiscal principles and arrangements, it is pointed out that with the current practice the Treasury either takes on debt from the market or is forced to restrict expenses for public services. In the report is it said that "The amount of coal that will be distributed and the number of families may increase since 2007 is the election year. In this case the bill for the duty loss which will be deferred to 2008 will be much higher than foreseen".
"Health expenses will be hidden from the sight of the public"
It is reminded in the fiscal monitoring report that, with the "Law for Amendments on the Income Tax Law and Some Other Laws" which has been published in the official gazette in the beginning of March, elimination of debts of social security institutions to state hospitals and university hospitals by offsetting, cedeing claims, and cancellation have been arranged. "A practice which is in violation of the principle of generality which is one of the leading principles of budget is excersized with these legal arrangements. That is, the income and expense items which are not booked in the budget are reflected in fiscal reports." The report continued as follows: "With the ceding or cancellation of receivables and partial deletion practices, public receivables will be booked less by an amount which will be equal to the cancelled amounts and thus public sector general balance will be better. Here, the factor which will determine the impact will be the amount which is not accrued by the social security institutions. The expense and deficit will be presented less from a fiscal discipline perspective, whereas health expenses which have not been presented will be hidden from the sight of the parliament and the public. The third temporary provision of the third item of the law arranges the destruction of the documents relating to the settled receivables after the settlement. It means that the receivables which is the subject of this document are not booked in the accounts of the social security institution as debt. The destruction of documents causes an unfavorable situation in regard to fiscal transparency and accountability responsibilities. Finally, the cancellation of the receviables of revolving funds may have adverse effects on the amount and quality of services provided by these institutions in the short run."
In the report which is stated that the best course of action would be to pay for the duty loss in the year which is occurs via an advance allocation which will be put into the budget in accordance with generally accepted fiscal principles and arrangements, it is pointed out that with the current practice the Treasury either takes on debt from the market or is forced to restrict expenses for public services. In the report is it said that "The amount of coal that will be distributed and the number of families may increase since 2007 is the election year. In this case the bill for the duty loss which will be deferred to 2008 will be much higher than foreseen".
"Health expenses will be hidden from the sight of the public"
It is reminded in the fiscal monitoring report that, with the "Law for Amendments on the Income Tax Law and Some Other Laws" which has been published in the official gazette in the beginning of March, elimination of debts of social security institutions to state hospitals and university hospitals by offsetting, cedeing claims, and cancellation have been arranged. "A practice which is in violation of the principle of generality which is one of the leading principles of budget is excersized with these legal arrangements. That is, the income and expense items which are not booked in the budget are reflected in fiscal reports." The report continued as follows: "With the ceding or cancellation of receivables and partial deletion practices, public receivables will be booked less by an amount which will be equal to the cancelled amounts and thus public sector general balance will be better. Here, the factor which will determine the impact will be the amount which is not accrued by the social security institutions. The expense and deficit will be presented less from a fiscal discipline perspective, whereas health expenses which have not been presented will be hidden from the sight of the parliament and the public. The third temporary provision of the third item of the law arranges the destruction of the documents relating to the settled receivables after the settlement. It means that the receivables which is the subject of this document are not booked in the accounts of the social security institution as debt. The destruction of documents causes an unfavorable situation in regard to fiscal transparency and accountability responsibilities. Finally, the cancellation of the receviables of revolving funds may have adverse effects on the amount and quality of services provided by these institutions in the short run."
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