Monday, March 26, 2007

Where are the adults when you need them? 

Of all the things the opposition likes to bitch, moan, and whine about one of the silliest is that there are no independent institutions in Venezuela. Supposedly Chavez controls everything. Yeah, sure.

I do have to confess, there are times when I think it would be better if Chavez really did exercise control over everything. It could hardly be worse than having the current joke of a Supreme Court issuing some, let us say for lack of a better term, breathtaking rulings.

Of course, the most (in)famous such ruling was back in 2002 when the court ruled that people could not be tried for overthrowing the government on April 11, 2002. There was no coup – it was a “power vacuum” they said. A “vacuum”?!?! What an interesting concept. “No officer, I dind’t steal Mr. Jones car. It was parked on the street, no-one was around, there was an ownership “vacuum”, and I stepped in to fill the vacuum.”

Anyways, while the Supreme Court hasn’t issued as absurd of a ruling since then it’s not as if it hasn’t tried. Take its recent ruling on income taxes. The Constitutional Chamber of the Supreme Court ruled that income tax could not be applied against irregular income, or bonuses, but only against base income.

In the case of Venezuela this is no small thing. Most people in Venezuela get a large part of their salaries in the form of year end bonuses that are various multiples of a months salary. For example, in Venezuela’s Central University employees get paid the equivalent of 17.33 months each year – twelve months as regular pay and 5.33 months in the form of bonuses. This is common throughout Venezuela. What the court has decided is that people should be subject to taxes only on the 12 months of their salary and not the 5.33 months (in the case of the Central University) of bonus they receive.

Sure seems absurd to me. Bonuses sometimes get paid in the United States too. The huge multi-million dollar signing bonuses that football players get paid come to mind. I’d sure be more than a little upset if some court decided my measly little salary should be taxed but a $20 million signing bonus is exempt from taxes.

Theoretically the job of this “Constitutional Chamber” is to determine if laws are Constitutional or not. So maybe we should take a look at what the Venezuelan Constitution says about taxes:

Article 316: The taxation system shall seek a fair distribution of public burdens in accordance with the taxpayer’s ability to pay, taking into account the principle of progressive taxation, as well as protection of the national economy and raising the standard of living of the population, the foundation therefore being an efficient system for the collection of taxes.

I sure don’t see anything in there that would make it unconstitutional to tax bonuses. In fact, given that in accordance with the above provision taxes are supposed to be progressive it would seem that NOT taxing bonuses is what would be unconstitutional.

Be that as it may the Supreme Court made its ruling. So now the government will be losing gobs of tax revenue (yeah, Chavez wants less tax revenue so I’m sure he must have used his control over all institutions to tell the Supreme Court to screw up his governments tax system!?!?). Worse still, it is even conceivable they could have to refund lots of taxes to some rather wealthy Venezuelans. And oh, yeah, lest we forget, the highly paid Supreme Court justices also get some pretty big bonuses – so in effect they just gave themselves a hefty tax cut. Maybe that is their way at getting back at Chavez for saying that the salaries of high government officials needed to be cut.

With this ruling all hell has broken loose. The National Assembly is more than a little steamed that their tax law has in effect been re-written to lighten the tax burden of the rich. What’s more, they claim that the Supreme Court has moved in to their turf by declining to do what is within its purview, declaring the law unconstitutional, but rather in effect legislating by changing the law. According to the National Assembly only the legislature and President can change or modify laws. Constitutional lawyers seem to agree with this.

Currently the National Assembly has formed a committee to in essence figure out what it is going going to do about this. The Supreme Court as a whole (as opposed to the one chamber that made this decision) seems to be at a loss for what to do. So this soap opera looks likely to continue.

I personally don’t know what the solution is. But it does seem that the Venezuelan Supreme Court is in need of some adult supervision. Seeing as Chavez is accused of controlling every aspect of the Venezuelan government anyways, maybe he should go ahead and give it some.


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