Question 22N.3.HL.TZ0.2b
| Date | November 2022 | Marks available | [Maximum mark: 10] | Reference code | 22N.3.HL.TZ0.2b |
| Level | HL | Paper | 3 | Time zone | TZ0 |
| Command term | Recommend | Question number | b | Adapted from | N/A |
Figure 2 illustrates the daily world price of wheat in US dollars (US$) per kilogram from August 2020 to February 2021.
Figure 2
On 17 December 2020, Turkey eliminated a 20 % tariff it had imposed on wheat imports from Russia. Russia had recently decided to introduce a tax on its wheat exports. Turkey is the largest flour exporter in the world and Turkish flour exporters buy 85 % of the wheat they need in their production process from Russia.
[Source: Hürriyet Daily News, 2020. Turkey extends zero-tariffs on wheat imports to April [online] Available at:
https://www.hurriyetdailynews.com/turkey-extends-zero-tariffs-on-wheat-imports-to-april-160933 [Accessed
29 September 2021] Source adapted.]
Figure 3 illustrates the Turkish wheat market. Before the 20 % tariff was eliminated, the price for wheat in Turkey was US$7.20 per kilogram. S is domestic supply, D is domestic demand, Sw is world supply and St is world supply with the tariff.
Figure 3
Table 4 shows the income tax rates in Turkey for 2020.
Table 4
Beycan resides in Turkey and earns TL955 000 annually.
[Source: Crowe, 2020. Practical Tax Turkey 2020 [online] Available at: https://www.bcct.org.tr/wp-content/uploads/202011-
Crowe-Practical-Tax-Summary-November2020.pdf [Accessed 29 September 2021]. Source adapted.]
Table 5 shows the income earned by different quintiles of Turkey’s population for 2017.
Table 5
[Source: Kayikci, H., 2019. Course of Income Inequality in Turkey. Theoretical Economics Letters, 9, 2085–2092.]
Table 6 shows selected tax revenue sources and the Gini coefficient for Turkey, Austria, Germany and the OECD average.
Table 6
1 2018 data
2 2019 data
[Source: Enache, C., 2020. Sources of Government Revenue in the OECD, 2020 [online] Available at:
https://taxfoundation.org/sources-of-government-revenue-in-the-oecd-2020/ [Accessed 29 September 2021].
Source adapted.
Tax Foundation, n.d. Taxes in Turkey [online] Available at: https://taxfoundation.org/country/
turkey/#:~:text=Individual%20Taxation%20in%20Turkey&text=These%20taxes%20are%20typically%20
progressive,addition%2C%20countries%20have%20payroll%20taxes [Accessed 29 September 2021].
Source adapted.
Tax Foundation, n.d. Taxes in Austria [online] Available at: https://taxfoundation.org/country/austria
[Accessed 29 September 2021]. Source adapted.
Tax Foundation, n.d. Taxes in Germany [online] Available at: https://taxfoundation.org/country/
germany/#:~:text=Sources%20of%20Revenue%20in%20Germany,and%20services%2C%20and%20
property%20taxes [Accessed 29 September 2021]. Source adapted.]
The following information was published in the United Nations Development Programme 2016 Regional Human Development Report: “Inequalities in Turkey: An Overview”:
- The Human Development Report reported that Turkey’s gross national income (GNI) per capita ranks at 50, while its standard Human Development Index (HDI) rank is lower at 62.
- Turkey’s Inequality-adjusted Human Development Index (IHDI) score is almost 16% lower than its standard HDI score.
- The share of public expenditure on education is 2.9% of gross domestic product (GDP) in Turkey, while the average share of public expenditure on education is 4.9% of GDP among other high human development countries. Even among low human development countries, the average share is 3.6%.
[Source: Buğra, A., Yılmaz, V., Birelma, A., Gürsoy, B., Taşkın, Y., Dodurka, Z., Ekim Akkan, B., Göçmen, I., UNDP. 2016.
The CASE STUDY on: Income and Social Inequalities in Turkey [online] Available at: https://www.tr.undp.org/
content/turkey/en/home/library/human_development/socialinequalities.html.]
[Source: Destek, M., Sinha, A., Sarkodie, S., 2020. The relationship between financial development and income inequality
in Turkey [online] Available at: https://journalofeconomicstructures.springeropen.com/articles/10.1186/s40008-020-0187-6
[Accessed 29 September 2021]. Source adapted.
OECD. 2012. Income Distribution Database, http://www.oecd.org/social/income-distribution-database.htm.
[Accessed 29 September 2021]. Source adapted.]
Using the text/data provided and your knowledge of economics, recommend a policy that the government of Turkey could introduce to reduce income inequality.
[10]
Refer to paper 3 markbands, available under “your tests” tab > supplemental materials.
Possible policies may include (but are not restricted to):
- Increasing the progressivity of direct taxes
- Reducing reliance on indirect taxes
- Implementing or increasing a wealth tax
- Investing more in education
- Investing more in health care
- Investing more in human capital
- Increasing transfer payments (or, conditional cash transfers)
- Provide universal basic income
- Improving access to labour markets
- Measure(s) to improve equality of opportunity
- Policies to reduce discrimination
- Increase the minimum wage
- Any other valid policy.
Comments relating to question 1 generally apply to question 2 also. Specifically, the following weaknesses were evident in question 2:
- Focusing on economic growth without making a clear connection to income inequality. Often this included a long explanation of one or more interventionist supply-side policies. Increased spending on education is an appropriate policy but linkages to income inequality were generally rather weak.
- Using economic terms incorrectly. For example, classifying spending on education as expansionary fiscal policy — even when the response suggested that it could be financed by a more progressive tax system.
- Taking insufficient note of the data provided. Many responses suggested the adoption of a progressive tax system even though such a system already existed.
