Varlik Vergisi (literally Wealth tax or Capital tax) was a Turkish tax levied on the wealthy citizens of Turkey in 1942, with the purpose to raise funds for the country's defense in case of an eventual entry to the Second World War.
The bill for the one-off tax was proposed by the Sukru Saracoglu government, and the act was adopted by the Turkish parliament on November 11, 1942. It was imposed on the fixed assets, such as landed estates, building owners, real estate brokers, businesses and industrial enterprises of all citizens, including the minorities. However, those who suffered most severely were non-Muslims like the Jews, Greeks, Armenians and Levantines, who controlled a large portion of the economy.
During World War II, Turkey remained neutral until February 1945. Officially, the tax was devised to fill the state treasury that would be needed if the Germans or Russians would invade the country. However, it is argued that another main reason was to nationalize the Turkish economy by reducing the minority populations' influence and control over the country's trade, finance and industries.
The tax was paid by all citizens of Turkey, but the country's non-Muslim inhabitants were generally imposed higher tariffs, often in an arbitrary and unrealistic way.
Around 2,000 people, who could not pay the enormous amount demanded for this sudden tax within the time-limit of 30 days, were arrested and sent to a forced labor camp in Akale near Bayburt in eastern Turkey.
However, the rigidly enforced law did not bring the anticipated results for the government. Companies increased the prices of their products sharply to capture their losses that created an inflationary crisis to much disadvantage for the low-income consumers.
Abolition and aftermath
The draconian law could not face the continuous domestic and foreign criticism out, and was abolished on March 15, 1944.
The opposition Democratic Party (DP) used the ill-effects of this taxation as a main feature of its campaign rhetoric in the general elections of 1950, and so accomplished a landslide victory against the ruling Republican People's Party (CHP).