Friday, April 02, 2004

Another indicator of economic recovery in Venezuela 

The Venezuelan opposition to President Hugo Chavez makes much about how he has supposedly destroyed the Venezuelan economy. Of course nothing could be further from the truth. It is the opposition itself which has done enormous damage through its coup attempt and numerous lock-outs.

The two month long lockout in from December 02 through January 03 inflicted billions of dollars of damage and did cause the economy to contract sharply. However, since that time the Venezuelan economy has been growing quite rapidly and has almost completely recovered from the lock out. Basic macro-economic indicators such as an increasing GNP and a declining unemployment rate show this clearly.

However, now there is another piece of data which shows how the Venezuelan economy has recovered. The Venezuelan Tax Authorities, Seniat (Servicio Integrado de Administracion Aduanera y Tributaria) reports that tax collections are at record levels. According to Seniat tax collections in March were two trillion Bolivars whereas the budgeted tax collections were only 1.5 trillion. Tax collections are running ahead of budget for the year to date as well.

Now it is a debatable proposition whether taxes are good or bad. But when tax receipts are high, higher in fact than what was expected. It is a very strong indicator that the economy is doing well. And so it is in Venezuela.

Another reason why tax collections are up, apart from the improving economy, is that the Chavez government has been much more aggressive in clamping down on tax evasion. Chavez last year implemented tough new policies whereby taxed were to be collected from professionals such as doctors and lawyers who had largely been exempt from them in the past. The government has also been mores assertive in collecting taxes from businesses and even judges and politicians. So the next time you hear the people in the opposition crying like some stuck pigs you know what might be causing it.


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