NEGATIVE EFFECTS OF SMUGGLING TO TURKISH ECONOMY

BARI SAYAN Business Management AFE 154 Reading Academic Writing & Critical Thinking II

Table of Content Abstract I.Introduction 1.1 Background 1.2 Purpose of the Report 1.3 Statement of the problem 2.Methodology 3.Findings 3.1 Economic Smuggling Types in Turkey 3.1.1 Tax Smuggling 3.1.2 Money Smuggling 3.1.3 Goods Smuggling 3.2 Disadvantages of Smuggling in Turkey 3.2.1 It decreases the Gross Domestic Product 3.2.2 The Turkish Liras Loosing Value 3.2.3 It increases taxes 3.3 How to prevent Smuggling? 3.3.1 By increasing security in duties 3.3.2 By increasing fiscal control 4.Conclusion 5.Bibliography

ABSTRACT

In almost every country in the world, smuggling activities exist for a long time. A good, which is prohibited, low or too expensive in a country, cannot be traded easily. Goods like that can find purchaser easily and the seller earns a lot of money illegally. There are many smuggling types and all of them damages the national economy Government uses many methods to prevent smuggling.

I. INTRODUCTION 1.1. Background After Turkish Grand National Assembly opened, customs laws have been put into effect. Everything that passes through the borders of Turkey is always registered and their taxes are paid. Moreover, every tradesman in Turkey has to pay the taxes of what he sells but millions of people smuggle taxes and get extra profit illegally. Unfortunately, these people damage the Turkish economy.

1.2 Purpose of the Report Nowadays, smuggling rates has reached a dangerous size. Almost every shopping became unregistered and nobody gives importance to taxes.

1.3 Statement of the Problem Smuggling increases everyday. Hence, smuggling brought much more economic problems. This research shows how to reduce these kinds of problems.

2.Methodology

A number of library and electronic resources, which contain relevant data and analysis, were utilized in this report. The book, Gmrk Kanununda Kaakclk by Mehmet Kayhan is used for information about one of the most famous smuggling type: Goods Smuggling. This report also consulted Metin Erturuls famous book called Kaakclk Sular. Articles from electronic sources that published studies and researches conducted recently are also used to investigate the effects of securities and government employees in smuggling.

3.Findings 3.1 Economic Smuggling Types in Turkey 3.1.1 Tax Smuggling

In Turkey, millions of people trade something and they all have a tax number to pay their taxes. %18 of their giro are paid as taxes to the government. Both a small tradesman and a powerful businessman that owns a big company must show the bills of the goods to the government. From the bills, the percentage of the taxes is calculated. Most of the companies in Turkey sell goods without bills so they dont pay tax to the government. This illegal selling damages Turkish Economy.

3.1 Economic Smuggling Types in Turkey

3.1.2 Money Smuggling

In every country, the values of the currencies vary. A euro and a dollar do not have the same value. Because of the low value of Turkish Lira, it is smuggled in Turkey and it becomes valuable. But this illegal case decreases the whole Turkish Liras value in Turkey and damages the Turkish economy.

3.1 Economic Smuggling Types in Turkey

3.1.2 Goods Smuggling Goods smuggling is the most common smuggling type in Turkey. Some goods are illegal in Turkey, for example: using drugs is illegal because its harmful for our health. For every industrial product that is selled and also an exact percentage of imported goods, we pay taxes. When we play games of chances, again we pay taxes. But the goods that pass through the borders without paying their taxes damages Turkish Economy. This situation effects income, expenditure and also effects import and export equilibrium.

3.2 Disadvantages of Smuggling in Turkey 3.2.1 It decreases the Gross Domestic Product Both the goods that produced in Turkey and the goods that imported to turkey which are also produced by Turkish people are all makes Gross Domestic Product (GDP). The exported goods are calculated with the sum of postpaid goods and the goods that imported goods values. But on the other hand, there are some goods that pass through the borders illegally without paying their taxes so it decreases GDP. Also, import and export equilibrium changes. It also damages the Turkish Economy.

3.2.2 The Turkish Liras Loosing Value

All countries currency values are different from each other. When people passes from a county that has a high currency value to a country that has a low currency value, their money becomes valuable. Because of that, people smuggle money. It is unregistered and illegal so it decreases the Turkish Liras Value. At the same time, while goods smuggling, because of import is bigger than export, the Turkish Liras loose value. It makes Turkish goods loose value. This situation makes the value of the goods that imported to Turkey higher.

3.2.3 It increases taxes

A big percentage of income of Turkey comes from the taxes. But the goods smuggling and also money smuggling decreases the rate of the Turkish money value. The profit thats made from the exchange of money decreases. For all that, because of the tax smuggling Turkish economy needs much more income. Government pays the roads, bridges, hospitals that are made by government and also Police Agency and Fire Agency services. But because of the taxes that are not paid, income of government decreases so government increases taxes. Nowadays, the increase of

taxes and the economic crisis began because of that situation. We are the only country that has the highest taxes in the world and it shows the size of the tax smuggling in our country.

3.3 How to prevent Smuggling? 3.3.1 By increasing security in duties

Smuggling mostly takes place in duties. Securities in duties do not give importance to the tax control. The securities in duties are open to bribery. Sometimes smuggling is done bu oiling securities hand in duties. The control of goods in duties is not enough. To prevent smuggling, the government has to control the securities in duties. Secondly, there are goods that even security doesnt notice. Nowadays, by development of technology, it can be controlled easily.

3.3.2 By increasing fiscal control

Tax smuggling is the smuggling type that most damages economy. To prevent this, there are many ways. The citizens must help to prevent. For example, when a citizen is buying a product, s/he must take the bill of that product. Bills show the total giro of the seller and 18 percentage of that giro is given to government and highly effects economys income. At the same time, in tax control, the control must be increased and the punishment should be dissuasive.

4.Conclusion There are many smuggling types in Turkey. Tax smuggling, money smuggling and goods smuggling are the most famous types of smuggling in Turkey. To prevent all these kind of smuggling types, the citizens and

government officials must work together. This kind of smuggling highly damages the Turkish economy. Every Turkish citizens economy damages

because of smuggling. We all have to work together to prevent this.

5.Bibliography Kaakclk ve Organize Sular Daire Bakanl: http://www.kom.gov.tr/Tr/ Smuggling news: http://www.milliyet.com.tr/index/kacakcilik Gmrk Kanununda Kaakclk Mehmet Kayhan, Gmrk ve Kaakclk Mevzuat Ali Dlek Kaakclk Sular Metin Erturul