International Journal of Public Finance (Dec 2018)
Motor Vehicles Taxes on Automobiles Investigation of Tax Justice
Abstract
The Turkish Motor Vehicle Tax entered into force in 1957 and today is a fortune tax amounting to approximately 22 million taxpayers. Tickets for motor vehicle tax started to be determined according to cylinder volume in 2004 instead of net weight in automobiles. With this amendment, the Motor Vehicle Tax has become an environmental tax as well as a wealth tax. Whether it is environmental tax or wealth tax, motor vehicle tax has some injustices in both cases. Older vehicles pollute the environment more, but are taxed less. When considered as a wealth tax, it seems that there is no complete connection between the value of the vehicle and the amount of tax paid. An amendment made in the Motor Vehicles Tax Act in 2017 added value lines in addition to the age and cylinder volume indications in I. The aim of the study is to examine the motor vehicle tax in terms of tax justice and to determine the effect of the new regulation in 2017 on tax justice. In this study the degree of relationship between the tax paid and the vehicle's value is determined. For this purpose, taxes paid in 2017 and 2018 on various models of most vehicles sold in Turkey in 2017 (188 vehicles) were calculated. The coefficient of correlation between these instruments and the tax paid is figured. It has been found that the new regulation increases the coefficient of correlation between the values of the vehicles and the tax they pay from 0.66 to 0.78. Considering the value of the vehicle while the motor vehicle tax is being calculated, it strengthens the connection with the value of the vehicle. This creates a positive situation in terms of tax justice. However, a tax that is fully compatible with the car's automobile values may be fairer. There is no change in the taxation of the vehicles although the resulting value of the accident is reduced. Also, keeping the age ranges of the vehicles (1-3 years, 4-6 years old) provides the same taxation of vehicles with different value. If taxation is made according to the actual values of the vehicles, the motor vehicle tax will become a more fair tax. In motor vehicles tax collection rate is 67% as of 2017. It is estimated that tax exemption effects low tax collection.
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