Ergün said incentives were like priming a water pump. “Water was added to the pump for the last six months. From now on, it is much more proper for the supported sectors to continue their path alone with new financing policies in cooperation with finance institutions,” he said.
Speaking in İstanbul on Tuesday at a breakfast meeting with members of the Economy Journalists Association (EGD), Ergün recalled that the government has taken measures to help businesses overcome hurdles amidst the financial crisis such as providing new financing tools, introducing tax reductions and restructuring debt. In this context, the government, for instance, reduced the special consumption tax to 10 percent from 18 percent in construction, automotives, home appliances, furniture and electronics. The minister said thanks to the reinvigoration in these sectors through direct and indirect incentives, large increases in unemployment rates were curbed.
However, some sectors which benefited from the tax reductions, such as textiles, were not very willing to reflect the betterment in conditions with tax reduction on their prices. “Producers are evaluating the cutbacks in tax rates as a factor to increase their profit margins rather than as a means to lower prices and increase sales. Prices remained at the same level despite sharp falls in tax rates. We witnessed the same anomaly when we reduced the rates for food and other sectors, too,” he complained.
If the support is retained after achieving the desired outcome, they will start to see a number of negative side effects, he claimed. “We have always been of the opinion that excessive incentives cause an anesthetic effect. If you continue giving antibiotics and auxiliary medication to a person even after he completely recovers, you are not helping that person any. You are in fact preventing this person from standing on his own two feet and furthering his own treatment,” Ergün argued.
‘Unemployment will persist’
The most long-lasting impact of the crisis will be on unemployment rates, the minister said. “We already had 10 percent unemployment, and another 3 percent was incorporated into this. We think this additional 3 percent will persist for some time,” he added. Losses in production and exports can to some extent be made up for, but the same is not valid for unemployment, the minister noted.
The minister defended new banderole duties on automobiles equipped with radio or music players, saying the state-run broadcaster must be financed in one way or another. The Turkish Radio and Television Corporation’s (TRT) 4 percent share in industrial electricity consumption had been slashed from 4 percent to 2 percent, the minister said, adding that they had to put forward an alternative source of revenue to compensate for the fall in TRT’s income.
A few minor problems still remain in regulations for the duty, Ergün said, adding that one of them was the application of charging duty on the price of automobiles rather than over radios or music players, while the other is to start retroactively charging duties to encompass sales that take place three months prior to the issue date of regulations. “My personal view is that the duties must only cover sales after the issue date of the regulation. We discussed this issue with TRT, too. They also admitted there is a possibility of trouble arising in applying these regulations and pledged to work on changing the regulation to apply only after the issue date.”
Benzer Haberler 
National
