Sector News
Turkey Boosts Procurement Fund with Conscription Exemption Fee

A scheme launched last year allowing Turkish men to pay a fee to avoid conscription has raised an additional €1.5 billion to fund procurement programmes, according to DefenseNews.

Turkish authorities made the announcement after the February 13 deadline for citizens to apply and pay for the scheme. Defence Minister Ismet Yilmaz said in January that nearly 113,000 Turks had applied to benefit from the scheme. He said authorities expected the final number to fall between 150,000 and 200,000 in total, meaning the government would collect between €1.05 billion and €1.40 billion.

Speaking after the deadline, Minister Yilmaz said the country hadn’t expected as many applications as it had received. He added that thanks to the paid conscription system, the government was “solving these people’s [conscription] problems and giving financial support to the armed forces.”

The scheme was introduced last December as a way of raising funds for defence procurement. Under the scheme, Turkish men older than 28 as of January 1 can pay a fee of 18,000 Turkish liras (roughly €6,500) to be exempt from military conscription. Turkey requires all male citizens over the age of 20 to serve between 5 and 12 months in the military, depending on his education.

In December Turkish authorities said that over 600,000 men qualified for the scheme, and that if all those who qualified applied for the scheme, the government would raise around €4.39 billion towards procurement spending.

According to an article in Hurriyet Daily News, Prime Minister Ahmet Davutoglu told Parliament in December that the money raised would be transferred to the Defence Industry Support fund and be used in efforts to “adopt a technology-intensive army.”

Turkey’s procurement agency, the Undersecretary for Defence Industries (SSM), collects receipts annually from the Defence Industry Support Fund. The fund is usually a pool of revenues from levies and indirect taxes on alcohol, tobacco and gambling. It has been widely speculated to raise around €880 million annually.

The revenues SSM collected from the Defence Industry Support Fund in 2013 totalled €1.3 billion, compared to €1.14 billion in 2006, and far less than 2008’s all-time high of €2.55 billion. SSM say that revenues amassed from the fund but not yet collected from the Treasury amount to €5 billion. They say the Treasury could pay this sum to SSM in instalments, or in the form of Treasury backing for future loans.

This is not the first time such an offer has been made over military service. Last time the offer was made to men over 30 at a far higher price, and far less people applied. This time the offer is made to middle-earners, and this has generated a higher number of applicants and a higher revenue.

Whether we approve of selling off military service or not, and there certinaly is an argument that it is unethical, the money made from about 700,000 young men selling their valuable possessions to pay to avoid military service, will undoubtedly inject more money into the economy. But what about social equality? And what good improved procurement and modernisation programmes by the Defense Industry Support Fund if there are not enough bodies to fill the ranks that use them?

Or is this also an idea for other countries as a money raising tool? As it becomes harder to raise taxes from multinational firms, perhaps governments might introduce conscription, then charge people to avoid it?  It would be a creative way of raising money for government procurement programmes, if nothing else!