NEWSLETTER-2020-metin

305 TAX LAW Special Consumption Tax from Past to Today* Att. Alper Uzun Introduction The 1990’s hold significant importance by means of the develop- ments that took place in the global economy. During the transition to the second half of the 1900’s, the Federal Reserve increased interest rates, and the hot money flow changed its direction from East Asian countries to the West, the economic crisis of the Asian countries in 1998 caused the banks of Japan to lose 1 trillion United States Dollars and, then, the decrease of raw material prices led to an income loss in Russia, prompted Russia’s ruble devaluation, and initiated problems that resulted in importers who were not able to pay their debts. Turkey, who exports 15% of its products to Russia, was also adversely influ- enced and faced a financial bottleneck in 1999. When Turkey was still coping with the economic downturn, one of the vital industrial zones of the country, İzmit Gölcük, was hit by a massive earthquake inAugust 1999. Unfortunately, 3 months after that disaster, which resulted in loss of lives and properties to a great extent, another massive earthquake hit Düzce in November before the country had a chance to recover. As a result, the level of the economic crisis expanded. The economy shrank by 6%, inflation reached 70% levels, and the budget deficit also raised. During that time, Turkey was trying to apply a program to re- duce inflation and continued the fixed exchange rate policy. Due to the policy requirements, the value of 1 Turkish Lira was equal to the value of 1 United States Dollar and 1.5 Deutsche Marks. In line with the policy, the exchange rate increased by 20% every year. The aim of this policy was to ensure investors were not exchanging Turkish Lira currency. These policies resulted in interest rates to fall to a 40% level * Article of September, 2020