CHP’s Böke tells government: Proclaim the lists

AYŞE SAYIN

CHP Izmir MP Selin Sayek Böke, pointing out that people close to Prime-Minister Binali Yıldırım have emerged from the “Paradise Papers”, summed up the situation saying, “What is to happen if those who fled to Malta to avoid tax now come out and invite foreign investors to Turkey? This is so tragic.” Böke, noting that the Financial Crimes Investigation Board deems offshore accounts to be the most significant money-laundering method, has called on the government to proclaim the list of “tax havens” so as to include Malta that it has failed to do since 2006. Selin Sayek Böke, who numbers among the CHP’s economics experts, replied to Cumhuriyet’s questions.

- In the documents known as the “Paradise Papers,” the Prime-Minister’s companies in Malta have emerged among records of offshore companies some of whose activities are questionable. There appear to be a total of eight companies connected to Prime-Minister Binali Yıldırım’s sons, uncle and nephew. The Prime-Minster has not denied this, either, and called it “normal commerce.” How do you sum up all of these developments?

It is nothing like normal. It is also not normal for this to appear normal to his excellency the Prime-Minister. We are encountering a Prime-Minister who is trying to conceal the truth that this offshore mechanism is a mechanism to evade tax and who in the process confesses to the downside that this thinking entails for the citizenry. What the Prime-Minister says boils down to: “We have the wherewithal and we have spirited our money and companies into tax havens to avoid paying tax in Turkey. And we have left the workers and producers to shoulder the country’s tax burden.” The government is targeting tax revenue of 614 billion lira. Who will pay this tax? You, we, all of us, but not the Prime-Minister and his relatives.

On the other hand, what is to happen if those who fled to Malta to avoid tax now come out and invite foreign investors to Turkey? This is so tragic.

- Is this a problem that all countries experience? Or do these recent revelations point to a problem that is particularly critical for Turkey?

For sure they do. America’s National Bureau of Economic Research published a study one month ago. The equivalent of around ten per cent of global GDP is invested offshore. Do not place too much stock by the word investment – wealth is being transferred there. The global percentage is ten, but this rate is close to twenty per cent in Turkey. It becomes apparent from the documents that a significant portion of that twenty per cent consists of those in power and their relatives along with representatives of pro-regime capital.

- Are they to pay tax, too?

Let us just return to one of the critical points for Turkey. It was said that certain regulations would be introduced in the last omnibus law “for the purpose of raising voluntary tax compliance.” I wonder if the ruling party’s ministers and prime-minister and their relatives will elect to afford such compliance in this voluntary manner, or if they will continue to spirit money offshore in a voluntary manner so as to avoid paying tax in their own country? Also, if, having moved in the omnibus law in the direction of further raising the envisaged tax revenue from increased motor vehicle tax, internet tax and rental income tax and hiking corporation tax, this ruling party’s prime-minister and his relatives who have gone to tax evasion zones will return to our country and pay tax? In the omnibus law, the Ministry of Finance is empowered, “to make the necessary regulations with a view to transporting services given to taxpayers into an electronic environment and enabling citizens to conduct their business and transactions in an electronic environment without going to tax offices and, additionally, enhancing the effectiveness with which unrecordedness is countered.” Will the Minster of Finance employ this power even if it is to the detriment of the Prime-Minister and his relatives? Or, will this power be used in a contrary manner?

Money laundering also involved

- Why are offshore accounts preferred and by whom?

Those who prefer tax havens are generally those who do not want to pay tax in their own countries, who conceal earnings obtained from illegal sources, who launder black money and who evade disclosure of information about their income and wealth – in short, who do not want transparency. That is, those who are unable to account for certain things.

- So, basically, the aim is not just not to avoid tax.

To a large extent it is to evade tax. But, as I have just said, it is not just tax that is involved. To a small degree, there is personal evasion like evading business partners and creditors. But, the most important thing is money laundering. It is known that offshore for the most part is one of the principal means used in Turkey for the purpose of “tax evasion”, “tax avoidance” or, through front companies, “laundering dirty money”. It is not I who says this, but the Financial Crimes Investigation Board. In its briefings, the Financial Crimes Investigation Board deems offshore to be one of the most significant money laundering methods and sets out how this is done and why it poses a great risk for Turkey. It is set out on the institution’s official web site and is there for all to see.

TURKEY HAS LEARNT THANKS TO CUMHURİYET

- Is there absolutely no statutory provision for these offshore companies in Turkey?

Of course there is. Turkey has been engaged in an official struggle for years along with the world to counter the tax loss ensuing from these tax havens and the offshore system. In fact, there is provision as of 2006 in Article 30/7 of the Corporation Tax Law whereby a thirty per cent deduction will be applied to all manner of payments to be made to companies domiciled or active in tax haven countries. But, not a single kurush of tax deduction has been made. Why? Because since 2006 the Cabinet has not promulgated and proclaimed the list of places that are to be considered tax havens. That is, there is a statutory provision and it is in force. But, its implementation has in a way been prevented by the Cabinet. If the Cabinet proclaims this list today, tax will be deducted from these offshore evaders. Can the making of such a proclamation be expected from a Cabinet that today convenes under the chair of his excellency Binali Yıldırım? Let us say it is made - will Malta, where it has emerged that the Prime-Minister’s relatives have eight offshore companies, be on this list? For heaven’s sake, the AKP, the party of the Prime-Minister, who said, “Let this matter be investigated” as soon as the Paradise Papers emerged, just this week rejected a parliamentary motion for a probe into the affair. I will leave you to imagine were this leads. I mean, this is quite simply a problem that is so intrenched, but is also to the same extent apparent. The problem of legitimacy, legal problems, the problem of morality – these are in any case basic problems.

- What kind of developments must be expected in Turkey in the wake of these revelations?

All Turkey has learnt of these facts thanks to Cumhuriyet newspaper. What will happen now? Credence cannot be attached to the Prime-Minister’s comments and his failure to display any shame when this broke out is his and his party’s disgrace. But, we will not make do with speaking of disgrace for sure. What now immediately needs to be done is for the Cabinet to proclaim the list of tax havens that it has failed to do since 2006 and Malta must be on this list. The necessary tax procedures must be applied forthwith to companies that have dealings in such countries. But, on top of this, it is clear that Prime-Minister Binali Yıldırım must immediately resign on account of this disgrace.