Turkey to raise income tax on top income bracket

Turkey is planning to raise the income tax rate from 35 percent to 40 and 45 percent for the top two income brackets in a draft bill submitted to the parliament, Bloomberg reported.

The rate will be raised to 40 percent for individuals making 500,000 ($ 85,000) to one million liras ($ 170,000), while top earners who make over one million liras will pay 45 percent income tax, according to a source quoted by Bloomberg.

Current plans don’t include a rate hike for lowest-income earners, said the source who wished to remain anonymous as the draft has not been made public yet.

The draft bill also includes a capital gains tax, Bloomberg said citing another unnamed source.

Turkey has been facing fiscal stress due to the economic downturn last year and the government's spending spree in the first half of 2019 ahead of the local polls in March. 

Despite the government’s tapping of the central bank’s resources to finance spending, the end of year fiscal deficit is set to reach 125 billion liras ($22 billion) versus the official estimate of 80 billion liras, analysts say.