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Let a 1 percent Wealth Tax be put into practice, creating an 'earthquake resource' of $150 billion

Erdemoğlu Holding
25 Mar 2024
İbrahim Erdemoğlu, ERDEMOĞLU Holding Chairman of the Board of Directors, made the following determinations while reviewing the problems experienced in the economy:

* In the economy, we experienced Ramadan and Eid in reverse. First we celebrated Eid, then came Ramadan.

* While inflation was rising, those who received low-interest loans made substantial profits. Moreover, some of those who received low-interest loans did not invest them in their businesses.

* People got used to the easy way, now they feel like a fish out of water when they start tightening their belts. It will not be easy for them to tighten their belts either.

* However, if people keep eating something sweet, they will suffer from it later.

* We are now in the payback period. Moreover, this period is not short; it will last at least 4-5 years.

 

He scrutinized the increase in the number of public sector employees:

- In 2002, 2.5 million people were working in the public sector. Now there are nearly 6 million public employees. This situation is the big humpback. You will either rapidly reduce the number of public employees or keep their salaries low. There is no other choice.

 

He made a comparison with the world regarding retirees:

- In many countries around the world, there is a balance of 1 retired person against 4 employees. We have 1 retired person for 1.6-1.7 employees. This is a huge burden for SSI. It is not a sustainable situation.

 

He contemplated the earthquakes of February 6, 2023, which caused great destruction and loss of life in his hometown Adıyaman (Besni) and hit 11 provinces in total:

- There was a large deficit in the budget due to the earthquake. Moreover, the acceleration of urban transformation in the Marmara Region, especially in Istanbul, will cause a great burden.

 

The general understanding in Turkey came to his mind:

- Many of our people have the mentality of "let sleeping dogs lie…”

 

He took into consideration that the economic crisis had greatly disrupted the income distribution, and considered the following as a solution:

- I think there is a need for a "Wealth Tax" in this period.

 

He constructed the "Wealth Tax" formula he had in mind as follows:

- 1 percent Wealth Tax is to be collected from everyone whose assets are over 6 million liras. 6 million liras of the assets of those included in the Wealth Tax should also be covered by the exemption.

 

He emphasized that everything from land to buildings and residences, from companies to stocks, bonds, and money in the bank should be included in the asset calculation:

- The Wealth Tax to be collected from assets over 6 million liras should be collected in 24-month or 36-month installments. The resources to be collected will reach 150 billion dollars.

 

He envisaged the following plan for the use of the resource:

- The 150 billion dollars to be collected should be kept in a separate fund, transparent, and subject to audit, outside the budget. 50 billion dollars should be spent on 11 provinces within the scope of the February 6 earthquake. 100 billion dollars should be used for the urban transformation of the Marmara Region, especially Istanbul.

 

Last week, Hakan Güldağ and I went to İbrahim Erdemoğlu's office and had a conversation. Erdemoğlu himself opened the Wealth Tax issue by saying "my personal opinion:"

- Wealth Tax of 1 or 2 percent does not push anyone. A person with a $1 billion company can easily pay $10 million at 1 percent installments in 24 months.

Then he added:

- The situation of low-income people is obvious. We are all in the same ship. Let us pay a 1 percent Wealth Tax and ensure that 150 billion dollars are collected. But, let a technical team manage the use of the resource. Everyone should be able to easily see where it is spent.

 

Two days after our conversation with Erdemoğlu, while meeting with one of Turkey's leading business people, we asked:

- Should Wealth Tax be introduced?

 

His answer was positive:

- In such a period, Wealth Tax may be one of the solution formulas.

"Wealth Tax" creates reactions and anxiety every time it comes to the fore on the agenda in our country.

For this reason, the "Peace of Existence" formula was applied several times during the AK Party governments.

Will the call coming from an important player of the business world, "There is a need for a Wealth Tax," ease the government's hand in this regard?

 

We are not on the complaining side

HAKAN Güldağ asked Erdemoğlu Holding Chairman İbrahim Erdemoğlu:

- How do you see the post-election situation?

He gave his answer, underlining it again and again, with the following sentences:

* We do not expect a major fluctuation in foreign exchange.

* We predict that tourism will be good.

* The external deficit will decrease with tightening.

* Tightening will also be felt in the domestic market.

 

He shared his own strategy:

- We do not be on the complaining side. We try to make the best halva under current conditions.

 

Then he added:

- Bankruptcies may increase after the 6th month of this year...

 

We want to complete the 1.5 billion dollar PTA investment in the 6th month

We asked İbrahim Erdemoğlu, Chairman of the Board of Directors of ERDEMOĞLU Holding, about the latest situation regarding the investments of Sasa Polyester within the group, and he listed them as:

* We are working to complete the 1.5 billion dollar PTA investment in the 6th month. There may be a delay of one to two months.

* Construction continues for the 550 million dollar fiber investment with a capacity of 450 thousand tons. We plan it to start operation in 2025.

* The "chips" investment, which will have a capacity of 950 thousand tons and cost 350 million dollars, is also ongoing. We aim for it to become operational in 2025 as well.

He summed up the costs of the three investments in question:

- So, our investment of 2.4 billion dollars continues in Adana.

We were curious about the investment they planned in Yumurtalık and he explained:

- We had purchased a 10 million square meter area in Yumurtalık. We are waiting for approval from the Ministry of Agriculture and Forestry to start investing.

 

Fraud is rampant, 'IPR' is to be abolished, exporters should pay their taxes and get a refund

Following the call for a "Wealth Tax," İbrahim Erdemoğlu, Chairman of ERDEMOĞLU Holding, brought up the issue of "Inward Processing Regime" (IPR) to the agenda with striking words:

- Importation with IPR is to be abolished. Everyone is to pay their taxes. The exporter is to receive the refund, because fraud is rampant...

He stated that there were intense requests for extension of time regarding IPR:

- Those who cannot export within the time granted with the IPR document keep requesting an extension of time. One who has 3 documents wants the 4th and 5th documents.

 

He also made a calculation regarding IPR:

- If the IPR application is abolished, 30 billion dollars of tax revenue will take place in the first year. Let this income be transferred to Eximbank. Let the exporters be given a credit equal to the tax they have paid.

 

He emphasized that IPR negatively affects those producing in Turkey:

- The fabric is bought from India, a small process is conducted in Egypt, and it is brought to Turkey. Likewise, Bulgaria is also used as an address for such detours.

 

He listed the impact of the abolition of the Inward Processing Regime as follows:

* The industry operates inside.

* Employment increases.

* We are no longer an import paradise.

* Foreign currency needs decrease.

 

He concluded the issue of IPR as follows:

- In the short term, there will be many people shouting at and reacting to this. However, it is understood that this is the right thing to do in the long run.

 

Sasa shares are up 405 times in TL and 37 times in dollar in the 2015-2023 period.

I reminded ERDEMOĞLU Holding Chairman İbrahim Erdemoğlu of his statement that angered investors who held Sasa Polyester shares:

- When we visited you with Hakan Güldağ and Handan Sema Ceylan at the end of November 2022, you said, "Since I sold it when it was 80 liras, I have been saying 'Sasa share price is too high, it cannot be bought'." I wrote it on November 30, 2022 and shareholders criticized it a lot.

Thereupon, he sent Hakan Güldağ and me two tables on TL and dollar basis, revealing the course of the shares from April 30, 2015, when they took over Sasa Polyester, until the end of 2023.

The TL table is as follows:

* When we bought Sasa Polyester on April 30, 2015, the share value was 0.09 TL.

* December 31, 2015: a Sasa share was 0.08 TL and annual CPI was 3.9 percent. Share value was 11 percent negative.

* December 31, 2016: a Sasa share was 0.18 TL and annual increase was 125 percent. CPI was 8.5 percent. That is, the share value increased twice.

* December 31, 2017: a Sasa share was 0.89 TL and the annual increase was 394 percent. CPI was 11.9 percent. The share value increased 10 times compared to April 30, 2015.

* December 31, 2018: a Sasa share was 0.93 TL and annual increase was 4 percent. CPI was 20.3 percent.

* December 31, 2019: a Sasa share was 1.25 TL and the annual increase was 34 percent. Annual CPI was 11.8 percent. Share value increased 14 times compared to 2015.

* December 31, 2020: a Sasa share was 3.26 TL and the annual increase was 161 percent. Annual CPI was 14.6 percent. The stock has increased 36 times since 2015.

* December 31, 2021: a Sasa share was 11.49 TL, the annual increase was 252 percent. CPI was 36.1 percent. The share increase has reached 128 times since 2015.

* December 31, 2022: a Sasa share was 47.83 TL and the annual increase was 316 percent. CPI was 64.3 percent. Since 2015, the share increase has reached 531 times.

* December 31, 2023: a Sasa share was 36.44 TL; there was a 24 percent decrease. Annual CPI was 64.8 percent. Looking at it since 2015, Sasa shares were 405 times higher.

 

The table in dollar terms is as follows:

* When we acquired Sasa Polyester on April 30, 2015, the share price was 0.03 dollars.

* December 31, 2015: a Sasa share was 0.03 dollars.

* December 31, 2016: a Sasa share was 0.05 dollars, annual increase was 87 percent. The increase has doubled since 2015.

* December 31, 2017: a Sasa share was 0.24 dollars and annual increase was 361 percent. The increase has been 7 times since 2015.

* 31 December 2018: a Sasa share was 0.18 dollar and the annual decrease was 25 percent. Since 2015, its increase has dropped to 5 times.

* December 31, 2019: a Sasa share was 0.21 dollars and annual increase was 19 percent. The increase has been 6 times since 2015.

* December 31, 2020: a Sasa share was 0.44 dollars and annual increase was 109 percent. Since 2015, the increase has increased to 13 times.

* December 31, 2021: a Sasa share was 0.86 dollars and annual increase was 96 percent. The increase has reached 25 times since 2015.

* December 31, 2022: a Sasa share was 2.55 dollars and annual increase was 197 percent. The increase has reached 75 times since 2015.

* December 31, 2023: a Sasa share was 1.24 liras and there was a 52 percent decline. Its increase since 2015 has remained at 37 times.

 

After sharing the tables, he gave the following message:

- If we look at the date since April 30, 2015, when we took over Sasa Polyester, the shares are 405 times higher in TL and 37 times higher in dollar terms. This is the situation.

 

News Source: NB Ekonomi

Link to the News: https://bit.ly/495kMER

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