Avdagiç: Income tax brackets and the upper limit of Social Security Institution (SGK) should be reviewed

Istanbul Chamber of Commerce (ITO) President Şekib Avdagiç stated that they have no issues with the minimum wage and emphasized the need to review the upper limit of Social Security Institution (SGK). He mentioned that whenever the parallelism or proximity between inflation and exchange rates is disrupted, the Turkish economy has to undergo sharp corrections. Avdagiç pointed out that in the past few years, this has been observed in the Turkish economy. He also stated that the relationship between inflation and the exchange rate changed in the second half of 2022, where the exchange rate remained stable while inflation continued to rise. This created a situation where exports became more challenging and imports became easier due to the attractiveness of imported products. Avdagiç highlighted the need for both sides to be considered when discussing the challenges faced by exporters due to the exchange rate. He stressed the importance of the exchange rate moving in line with inflation in order to maintain a logical approach.

Avdagiç further mentioned the importance of revising the tax brackets and highlighted the disparity between the increase in minimum wage and the income tax rates. He pointed out that the rate of increase in income tax has lagged behind both inflation and the increase in the minimum wage. Avdagiç called for a rapid adjustment of the tax brackets to align with the current economic conditions. He also emphasized the need to review the upper limit of SGK, stating that the current contribution rates are excessive for employees earning higher wages.

In summary, Avdagiç highlighted the following three important issues: the revision of tax brackets to keep up with inflation and wage increases, the review of the upper limit of SGK, and the need for revisions in severance pay regulations.