Turkey's defence budget raised by nearly 50 percent

Turkey’s 2017 defence budget was raised from $7.9 billion (28.7 billion TL) to $11.5 billion (41.3 billion TL), an increase of almost 50 percent from the beginning of the year, according the Official Gazette.

The figures come as Turkey continues to conduct military exercises near its Iraqi borders and maintains active deployment along its border with Syria. Turkey also made an advance payment to Russia last week for the S-400 missile defence system, a purchase, Turkey said, that was to help deal with the wars raging along its borders, despite the risk of damaging relations with its NATO allies.

Turkey has been aiming to develop its indigenous defence industry for several years now, and increasing investments in its defence budget is in line with this policy. 

New tax measures to add billions to budget

New tax measures announced last month are to help create revenue for defence spending.

Deputy Prime Minister Mehmet Simsek explained on Thursday that recent tax hikes will help transfer funds to the Defence Industry Support Fund and the Ministry of National Defence to “fight against terrorism, eliminate threats facing [Turkey], and increase deterrence capacity.”

He added that in 2018, an additional $4.7-4.9 billion (17-18 billion TL) would be allocated to the Ministry of National Defence and military industries.

“No government would increase taxes without reason,” he continued. “Additional arms systems are on the agenda so Turkey can cope with the threats [it faces]. To meet [this need] we chose increasing taxes over taking loans.”

Turkey’s new tax measures announced in September within its three-year economic programme will add $7.5-$7.8 billion (27-28 billion lira) to budget revenues next year, Finance Minister Naci Agbal said.

The government will increase the financial sector’s corporate tax rate by two percentage points to 22 percent and raise the motor vehicle tax on passenger cars by 40 percent.

Agbal said that the new tax measures are aimed at widening the fiscal space by creating permanent income channels, adding that the most important issue was taking a sound stance against geopolitical and economic risks.

Global defence spending

The most recent study on global military expenditure shows that a total of $1,686 billion was spent in 2016, which indicates an increase of 0.4 percent compared to 2015. This spending makes up about 2.2 percent of global GDP. 

Despite having the second-largest army in NATO, Turkey was not among the top fifteen military spenders in 2016, which include the US, China, Russia, Saudi Arabia and India. 

The top fifteen spenders account for more than 80 percent of global military spending.

Military spending makes up most, but not all of a country’s defence budget.