ANKARA (AA) - Turkish Prime Minister Recep Tayyip Erdogan said on Tuesday, ''our purpose is to establish a tax system to reduce the unregistered economy and to collect taxes more efficiently.''
     Holding a news conference at the Ministry of Finance, Prime Minister Erdogan announced broad tax cuts as part of a drive to cut tax evasion, attract foreign investment and knock the country's lumbering tax system into shape as it prepares for opening of entry talks with the EU in 2005.
     Erdogan outlined reductions in two different types of income tax, one levied on wages and the other on personal earnings such as freelance work, noting that the two rates would be merged in 2006.
     In the meantime the ceiling on salary income tax will be cut to 35 percent from 40 percent, while the top rate for other personal earnings will fall to 40 percent from 45 percent.
     A bill submitted to parliament last week set out plans to reduce both these ceilings from January 1st, 2005.
     Erdogan said corporate tax would be cut to 30 percent from 33 percent as of January 1st, 2005, while value-added tax on food, health and education would plunge to 8 percent from 18 percent.
     All financial instruments will be taxed at the same rate starting in 2006, instead of the current complex system where taxes on revenues from bank deposits, investment funds or company shares vary from 7 to 24 percent.
     ''Our purpose is to establish a tax system to reduce the unregistered economy and to collect taxes more efficiently. We have taken very important steps on this in the last two years. Our government has shaped its targets of the new tax system on three basic principles. First of all, we need an understandable tax regulations. Secondly, the tax burden should be envisaged. A stable, envisaged and confidence-building tax system is inevitable. Our third principle is establishment of a sound and influential tax management,'' he said.
     Prime Minister Erdogan added, ''our government is confident it would not lose any tax revenue as a result of the cuts because lower rates would push down tax evasion.''
     (UK-A֩
2004-12-21