Title                     : Change in the Paradigm for Political Economy and a Need for Environmental Tax Reform in Türkiye

Volume               : WP202403

Writer(s)             : M. Coşkun Cangöz - İsmail Arslan

Language            : English

Date                    : October 2024

Abstract         : Türkiye is highly vulnerable to the impacts of climate change as most Mediterranean countries. In recent years, flooding, heatwaves, droughts, wildfires, and landslides have affected the country with increasing frequency and intensity. In addition, Türkiye is the world’s 17th carbon emitter. While the country’s emissions per capita and per unit of GDP remain below OECD average, total emissions have been increasing sharply over the past decade. To support the country’s growth process, there is a clear need to transition toward a greener economic model to achieve more sustainable growth, and mitigate climate change, and its impact. This document aims to provide an overview of the current state of environmental taxation in Türkiye, highlighting the key principles and challenges that need to be addressed. With the emergence of global climate change on the agenda (as in the Kyoto Protocol and Paris Agreement), beyond the regional negative effects of industrialization on the environment and air, the greenhouse effect has led policymakers to develop environmental regulations and taxes in industries with high pollution output to limit carbon emissions. However, there are difficulties in measuring the economic and non-economic costs and benefits of environmental regulations and taxation, and many different parties are affected by the regulations at local, national, and international levels. For this reason, tax incentives are quite popular recently not only in the high-income countries but also increasingly being adopted in middle- and low-income countries. Although Türkiye has made some progress in implementing environmental taxes, their effectiveness in achieving net-zero commitments remains limited. In addition, Türkiye continues to provide substantial environmentally harmful subsidies. Under these circumstances, this paper recommends more comprehensively taxing pollution with an introduction of environmental tax reform. 

Keywords           :Tax policy, Environmental taxes, Tax reform

JEL Classification : H23, H25, H30, Q58 

You may read working paper from here.