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03-25-2009, 04:08 AM
Posted on Mon, Mar. 23, 2009
Hugo Chávez plans big sales tax hike
BY FABIOLA SANCHEZ
Falling oil prices are forcing Venezuela to boost sales taxes and nearly triple domestic debt sales to make up for an expected 6.7 percent decrease in public income this year, President Hugo Chávez has announced.
The socialist leader said he will ask lawmakers to increase sales taxes on goods and services from 9 percent to 12 percent to help make up for plunging oil revenue in the crude-rich nation.
The government now expects $72.7 billion in fiscal income, and the revised 2009 budget anticipates crude prices of $40 a barrel, not the $60-a-barrel forecast by lawmakers last year, Chávez said in a televised speech. Venezuelan crude reached about $43 a barrel last week.
Venezuela will also sell an additional 22 billion bolivars ($10.2 billion) in local-currency bonds to raise cash this year, bringing internal public debt to 64.5 billion bolivars by year's end, Chávez announced late Saturday, giving no details on the issue date, term or interest rate the debt will carry.
The government may be forced to rein in years of steep increases in public outlays, Chávez added, promising that salaries and spending by high-level public officials would be reduced.
''The privileges are over,'' he said, vowing to send a revised budget to the legislature, which is controlled by his allies, in coming days.
Soaring crude prices fueled years of record public spending in oil-rich Venezuela, winning Chávez support among millions of the country's poor. The government has not run a budget deficit since 2003.
But Venezuela depends on oil for 93 percent of exports and nearly half its federal budget, and crude prices have slipped 65 percent since their July 2008 peak, cutting off a key source of income.
Chávez has insisted the country can avoid steep spending cuts by tapping some of the nearly $100 billion in currency reserves and development funds that his government says it has collected in recent years.
Yet public spending has fueled 29.5 percent annual inflation in Caracas, Latin America's highest. Chávez on Saturday vowed to increase the minimum wage by 10 percent in May and another 10 percent in September to keep in pace with price gains. That move, along with the sales tax hike and bond sales, will only further drive inflation, said Pavel Gomez, an economist at the IESA business school in Caracas.
Source:http://www.miamiherald.com/news/americas/v-print/story/963008.html
Hugo Chávez plans big sales tax hike
BY FABIOLA SANCHEZ
Falling oil prices are forcing Venezuela to boost sales taxes and nearly triple domestic debt sales to make up for an expected 6.7 percent decrease in public income this year, President Hugo Chávez has announced.
The socialist leader said he will ask lawmakers to increase sales taxes on goods and services from 9 percent to 12 percent to help make up for plunging oil revenue in the crude-rich nation.
The government now expects $72.7 billion in fiscal income, and the revised 2009 budget anticipates crude prices of $40 a barrel, not the $60-a-barrel forecast by lawmakers last year, Chávez said in a televised speech. Venezuelan crude reached about $43 a barrel last week.
Venezuela will also sell an additional 22 billion bolivars ($10.2 billion) in local-currency bonds to raise cash this year, bringing internal public debt to 64.5 billion bolivars by year's end, Chávez announced late Saturday, giving no details on the issue date, term or interest rate the debt will carry.
The government may be forced to rein in years of steep increases in public outlays, Chávez added, promising that salaries and spending by high-level public officials would be reduced.
''The privileges are over,'' he said, vowing to send a revised budget to the legislature, which is controlled by his allies, in coming days.
Soaring crude prices fueled years of record public spending in oil-rich Venezuela, winning Chávez support among millions of the country's poor. The government has not run a budget deficit since 2003.
But Venezuela depends on oil for 93 percent of exports and nearly half its federal budget, and crude prices have slipped 65 percent since their July 2008 peak, cutting off a key source of income.
Chávez has insisted the country can avoid steep spending cuts by tapping some of the nearly $100 billion in currency reserves and development funds that his government says it has collected in recent years.
Yet public spending has fueled 29.5 percent annual inflation in Caracas, Latin America's highest. Chávez on Saturday vowed to increase the minimum wage by 10 percent in May and another 10 percent in September to keep in pace with price gains. That move, along with the sales tax hike and bond sales, will only further drive inflation, said Pavel Gomez, an economist at the IESA business school in Caracas.
Source:http://www.miamiherald.com/news/americas/v-print/story/963008.html