Giordani wants more of your money

“La patria nueva no es gratis, asi que hay que pagar…”

Finance and Planning Minister Jorge Giordani said in an interview with State-owned newspaper Correo del Orinoco that according to him, Venezuelans don’t pay enough taxes:

“It doesn’t reach 11% or 12% (of what the State taxation should be collecting). There’s no current legislation about that, but there’s room to grow…”

It doesn’t matter if we have already seen a broad but well-disguised series of tax hikes in recent years, or that a big chunk of oil revenues goes to a parallel budget for the comandante presidente with zero accountability. And let’s not forget that the Chavernment is getting us into huge debt at breakneck speed.

Nope, the socialist model must be built ASAP and therefore Giordani needs more money.  The people’s money. My money. El paquetazo esta mas cerca de lo que parece…

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  1. “a big chunk of oil revenues goes to a parallel budget for the comandante presidente with zero accountability.”

    The rest of the oil revenue is treated like taxed money, anyway, so, really, 100% of oil revenue is a 100% tax to all Venezuelans. This is the most regressive feature of Venezuela’s petrostate model, that the poor pitch in the same amount as the rich. But with the barrel at 100, even more so.

    • With 80% or more poor, there isn’t much regression. The real regression comes from the continued criminal stealing/giving away/mis-spending of virtually all of what’s left of the usable (50% or so, after China/ALBA/Petro-Caribe/debt interest) Venezuelan oil income.

      • NET, you’re right but missing a big part of the point. Let’s suppose we gave every Venezuelan a barrel of oil. Then every Venezuelan sold his barrel for 100$. Then the government decided to create a tax that charges every Venezuelan 100$. This tax represents 100% of the poorest Venezuelans’ income and almost 0% of the richest Venezuelan’s income. That’s why it’s ultra regressive.

        That the government spend the money wisely or wastefully is irrelevant to the above. If it wastes it, then it’s just a double crime. The point is that even if it spends the money on programs for the poor, it’s still the poor fronting the money for it; the greater the percentage of poor, the greater the percentage that they are fronting.

        • So, there is no regression in Cuba, since everyone is poor (Cort’s ideal “revolutionary” state). My point is that there are very few “rich” in Venezuela benefitting from whatever “regressive” economic measure currently in existence/to be developed, so that the sum total of money involved is inconsequential vs.the total amount of money available to be spent. So far as squeezing more out of this diminishing “rich” class, it’s not very practical without running them away for ever, as in Cuba; and this class is already paying a huge “progressive” tax by being prime targets of criminal “poor” insecurity, and Government anti-private property measures of all kinds….

          • NET, sorry if I’m not explaining myself clearly. Let me split it into independent processes: The first process is taxation, the second process is spending. Both processes can be regressive, progressive, or a mix. Gustavo made a point regarding Giordani wanting to increase taxation, a progressive taxation (i.e., those with more money pitch in a greater percentage of their money than those with less money). In passing, Gustavo made reference to oil money being *spent* with no accountability via a parallel budget. My comment emphasized that oil money has a “taxation” side to it, even before we consider its spending side.

            The taxation side of Venezuelan oil money is VERY regressive in that the poorer one is, the greater percentage of one’s income the oil represents. This is true regardless of the spending of oil money. It is also true regardless of the percentage of poor or rich people in the nation. Taking an equal amount from every citizen is tantamount to a regressive taxation, which is exactly to what taking people’s oil boils down.

            So, your reference to how little the few rich benefit from the *oil spending* is independent to what I’m mentioning, the *oil taxation*. Even if the total oil money were spent to benefit only the poor or only the rich, the *way* the money was “taxed” remains regressive.

            Your pointing out that in Cuba everyone is poor, is the irony of chavismo with respect to oil money; if they wish to be reducing inequality, then the current method of “oil taxation” is achieving the opposite effect by taxing the poor a greater percentage than the rich with every barrel of oil sold and its revenue managed as if it had been SENIAT revenue.

          • Ex Torres, I’m not really disagreeing with you in principle/theory, but more in practice. Although, as you know, all “non-oil taxation” is not progressive (e. g., the IVA, which probably is the lion’s share of Venezuela’s non-oil tax revenues, is very regressive). It is true that even if all Venezuelans were “poor”, those even so slightly better-off poor are, in effect, benefitting from the regressive effect of “oil taxation” at the expense of the slightly more-poor But practically, this benefit/regression effect is small in absolute terms of money, so that its effect is not so pernicious as it is in theory, such as it might be in countries where there is a much more marked distinction in poor vs. better-off classes, as well as these classes being much larger in size.The major problem is the mis-management/stealing of the oil money, however “taxed”, with some 50% of current/ near-future oil income already committed and unavailable for even rational spending.

          • All agreed. The irony in the Venezuela vs. Cuba thing is that in Venezuela not everyone is poor, so the existing inequality (however better than anywhere else) is worsening with the oil taxation. They are shooting themselves in the feet. As to the spending, that too, no discussion there; I was just pointing out to Gustavo that the chunk of oil money to which he was not making reference.


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