As we read at Murat Yetkin's commentary on Saturday, CHP (Republican People's Party) President Me. Deniz Baykal declared the first promise of his party for the elections. This declaration was featured at the first page of Radikal daily on the same day with the heading '300 liras per month for an unemployed household.  Yetkin quoted the details from Baykal's declaration: "Social service experts will set an amount. According to this, if none of the family members are employed and if the family is in the lowest income group; the woman in the family, as the head of the household, will be granted 300 lira salary per month. This payment will be received until one household member finds a job."

If the words elections, political party, and election promise come together, you start to think that a populist attempt is on the way. But this time it is not. On November 26, I shared the results of the Turkey Welfare Monitoring Survey conducted by TEPAV, The World Bank, and UNICEF.  The results indicated that negative impacts of the crisis were not limited to the rise in unemployment. Particularly majority of the self-employed and those employed in informal sectors claimed a fall in their revenues.  The survey conducted in Adana, Ankara, Istanbul, Izmir, and Kocaeli provinces revealed that households came up with various methods to cope with the impacts of the crisis. For instance, almost half of the parents in poor households stated that they reduced the amount of food consumption for their children.

This is one of the important problems of Turkey which waits to be solved. In some countries important programs geared towards the poor are implemented. For instance, some countries grant aids to poor households from the budget upon the fulfillment of some conditions. Among these the most prevalent ones are the systems that grant aids upon the condition that the parents send their children to school. Thus, the problem is not solved solely by easing the access to unemployment benefits and extending the period where aids are paid or increasing the number of beneficiaries. These are of course necessary. However there are also people who were faced with significant income loss though did not lose their job or those who were already unemployed. So, there should be implemented some systems which protect these groups too.

In March 2009, TEPAV published a report on the steps Turkey can take to limit the negative impact of the global crisis on the economy. Policy recommendations involved in the report were conveyed to a wide range of authorities as of the last months of 2008. Among these were the authorities responsible for designing and implementing such social policies. A part of the policy options offered in the report included the improvement of unemployment allowances and the provision of aids to retired people with low salaries and to the needy people. This way, the sections affected most by the crisis would have been protected and at the same time the income group with the highest propensity to consume, which would also predominantly demand domestically produced goods, would be provided with additional income. That is, such a step had a social dimension along with its economic dimension in stimulating domestic demand. But this step was not taken. Political choice manifested itself in the direction of introducing tax cuts that would make it easier for those who would already afford an automobile to do so.

TEPAV's study also calculated the cost of the recommended social policy. The impact of the policy on the budget was quite limited as the ratio to the national income. What is more, as it was an income improving policy, tax revenues would have tended to rise after a certain period and a substantial proportion of the initial deficit in the budget would be offset. As a result, it was a 'feasible' policy in economic terms.

The social policy declared by Deniz Baykal is highly important. Turkey had better discuss such policies. On the other hand, it should be noted that in order for the income transfers to be maintained by these policies to be 'worthwhile' and to be generalized toward larger groups, a tax reform should be launched. You see, this tax reform issue comes to the fore in terms of many fields: low savings rate-high current account deficit, policies to stimulate domestic demand, and social policies.

Let us see the issue from the good side: Thank God that ratio of tax revenues to national income is low in Turkey in comparison with many other countries. This way, we can be sure about the problem to concentrate on. It is evident that if this problem is solved, we will have a wider space to maneuver; for instance it is evident that then we can easily implement social policies recommended by Mr. Baykal.

This commentary was published in Radikal daily on 08.02.2010