Political Economy of Tax Evasion and Tax Loss in the Real Estate Sector

Abstract

This chapter engages with political economy of tax evasion and tax compliance issues, particularly focusing on deficiencies and problems within property taxation system in Turkey. The chapter questions if there are any political preferences, legal arrangements or cultural issues facilitating tax evasion and tax loss in Turkey. It first identifies the degenerating effects of frequent application of tax amnesties, having a lax tax reconciliation institution, and less than logical way tax information confidentiality principle is applied in Turkey. Then, the chapter investigates peculiarities and specific difficulties of real estate sector in general in relation to taxation. Finally, a comprehensive property tax reform based on a semi-public valuation system is proposed to reduce tax loss in this sector.