OVERVIEW OF FISCAL DECENTRALISATION 

The local government system in Turkey is organised into special provincial administrations (SPA), villages, metropolitan municipalities and municipalities. SPA is an “intermediate-level” local government unit operating at the provincial level. 

Legal acts governing fiscal decentralisation

With the aim of substantially modernising the local government system, which was still based on the centralised model of the Ottoman Empire, the Turkish government announced in 2002 an ambitious public sector reform package. The Metropolitan Municipality Law No. 5216 was enacted and approved by the parliament in 2004; SPAs are governed by the Special Administration Law No. 5302 of 2005, and municipalities by Law No. 5393 of 2005. In 2008, the Turkish parliament approved more legislation changing the criteria for the allocation of intergovernmental transfer shares across special provincial administrations and municipalities (Law No. 5779). 

Qualifying fiscal decentralisation

Despite the reforms of the local government structure enacted in the last decade, Turkey remains a country with a substantially centralised government organisation. The latest figures available (2011) show that sub-national government expenditures account only for a limited share (11%) of total government expenditures. 

Moreover, the historical series highlight how the level of local government expenditures compared to the general government expenditures has remained roughly constant from 2006 onwards.

Source: authors’ elaboration on OECD data. For further details, see methodology.  

LEVEL OF FISCAL DECENTRALISATION

The indicators presented below show that the level of fiscal decentralisation in Turkey is low both in absolute terms and compared to the EU average. Revenue autonomy (own revenue relative to total resources available) at the local level (province and municipalities) is lower than the EU average (25% versus 53%), this entails a dependency on central government transfers that is above the EU average (75% versus 47%). Local own revenues represent only 3% of total government revenues, a value that is lower than the EU average (13%).

Moreover, the path followed by all these indicators since 2006 points to a gradual decrease in the fiscal autonomy of local governments. 

Source: authors’ elaboration on OECD data. For further details, see methodology. 

The composite ratio, which captures aspects of fiscal decentralisation of both revenue and expenditure, suggests that provinces and municipalities have a degree of fiscal decentralisation (3%), substantially below the EU average (18%). This highly centralised system is also confirmed by the indicator measuring tax autonomy of local governments, which shows that local governments do not have any discretion over tax rates. 

Source: authors’ elaboration on OECD data. For further details, see methodology.  

Deficit and debt at sub-national levels

Local governments’ borrowing is subject to strict conditions and requires the approval of the central government. Data on the debt stock of Turkish local governments are not available. Figures for the deficit show that, from 2006 to 2009, the Turkish local government reported a position of net borrower while, in 2010 and 2011, the local sector turned into a net lender.  

Source: authors’ elaboration on OECD data. For further details, see methodology.