Turkey quakes to cost nation $6.2 billion – Minister

ANKARA, Nov 24 (Reuters) - The powerful August earthquake which killed more than 17,000 people was set to cost the nation's public finances $6.2 billion, Finance Minister Sumer Oral said on Wednesday.

Sumer Oral was defending before parliament a tax bill drafted to help offset damages wrought by the quake and seen crucial for the government to meet its 2000 fiscal targets.

He said the cost of the August 17 quake, which hit Turkey's industrial heartland, was compounded by a second tremor two weeks ago, which killed at least 749 people. Tens of thousands of people have been left homeless.

Finance officials have said they hope to generate between 600 and 750 trillion lira ($1.2 billion and $1.5 billion) in revenues from the additional taxes.

"This draft is aimed at carrying out the stability programme without allowing the effects of the quake to hurt fiscal balances," Oral said.

Prime Minister Bulent Ecevit's government has agreed an ambitious stability programme of fiscal reform and disinflation which is expected to win an International Monetary Fund loan deal by the end of this year.

Oral said foreign quake aid loans, put at $3.7 billion, were insufficient to meet damages. Domestic donations totalled more than $150 million. The draft tax bill would impose an additional five percent in corporate and income taxes on 1998 earnings and payroll earnings of more than 12 billion lira annually.

The bill also envisages an additional real estate tax and a one-off additional tax on vehicles as well as a 25 percent monthly communication tax on mobile telephone owners. The latter would be deducted monthly until June 30, 2000.

It also authorises cabinet to increase petroleum consumption tax by up to 500 percent, from a current 300 percent.

The bill also introduces monthly deductions from advertising revenues, broadcast licence and permit fees, revenues of the competition board, fees paid on share trading and fees for capital market transactions.

Their amount will be proposed by the finance ministry for approval by the prime minister after the bill takes effect.

Residents and companies affected by the August quake will be exempted from the additional taxes. Oral said four quake-hit provinces accounted for 15.05 percent of total tax revenues and 7.2 percent of Turkey's gross national product.

"It is beyond doubt that there will be significant losses in tax revenues this year and in 2000," he told the assembly.

A budget amendment to take account of the changes will follow the vote on the tax bill, expected by Thursday.

Debate on the bill was postponed in August after opposition from business and civil groups. Newspapers said at the time many were unwilling to shoulder the additional tax burden in the absence of government spending transparency.

Non-monthly payments of the additional taxes would be in three instalments.