Tuesday, June 17, 2008

Republicans for Chavez 

Recall how the other day a whole bunch of rich people stood and applauded Chavez? Some of them were so giddy they might have wet their pants. As I said before, I hadn't seen so many rich people so happy in Miraflores since, April 12, 2002 (btw, I wonder how many of those honored guests in Miraflores the other day were last there to sign the Carmona Decree?).

Anyways, what brought about their state of delirium was the fact that Chavez eliminated the tax on financial transactions. That tax was exactly what the name implies - a tax on all banking and brokerage transactions.

As you can imagine, well to do people wheeling and dealing in stocks hated it. The 60% of Venezuelans who don't even have bank accounts probably barely knew it existed. And although it wasn't per se graduated by income it was a highly progressive tax payed almost entirely by the top 10% or 20% of Venezuelan society.

So isn't this rather ironic - a "leftist" government eliminating a tax on the wealthy? I sure think so. Actually, I think it is worse than ironic, it is disgusting and a sell out of the principles the Chavez government is supposed to stand for.

So far there are two defenses of this act that I have heard. The first is, "it's a minor tax so who cares"?

Well, a quick check of the SENIAT (the Venezuelan tax authority) shows it is anything but minor:

Por concepto de Impuesto a las Transacciones Financieras ITF, ingresó al Fisco Nacional la cantidad de 1,13 millardos de BsF, lo cual representó el 21,1% del total de lo recaudado en el mes.

Via the Financial Transactions Tax 1.13 billion BsF entered the national treasury, which represents 21.1% of the total collected in the month.

So there you go, for the month of May 2008 about $526 million dollars was collected via that tax. Annualized that comes to $6 billion dollars!!!! This is not peanuts. Further it is a stunning 21% of all tax revenue collected.

To a government that is so high on petro dollars it has lost its bearings maybe this is nothing, but in reality $6 billion dollars per year could go a long ways. They could build a whole automobile industry or shipping building industry with that. They could probably completely renovate every hospital in the country. And if they don't want to spend it, they could pay off the entire foreign debt of the country in a little over 4 years just with the proceeds fo that tax!!

The second argument is that the tax was somehow "inflationary". This is patently absurd and is just playing on the fact that the average person doesn't understand economics and doesn't know better. Taxes don't create inflation. Having too much money chasing too few goods does. Yet taxes neither create nor destroy money - they just change whose hands that money is in. So by eliminating this tax the government will have less money and rich Venezuelans will have more. Anyone care to tell me how that will reduce inflation (and I can't wait for the first person to tell me "yes, it will because the rich will take the money out of Venezuela and put it in banks in Miami")

Quite frankly, this constant use of "inflation" as some catch all defense for every dumb act of the governments has gotten old already. Really, really old.

Suffice it to say, the elimination of this tax is a body blow to the finances of the Venezuelan government, puts a cool $6 billion more in the hands of the rich (seriously, some of those rich assholes standing and applauding in Miraflores will pocket tens of millions per year because of this), and deprives the government of vast resource it could use to help the poor and develop the country.

And someone please tell me again, this is supposed to be a leftist government?!?!?!?

If it is all I can say is I am confused. Really, really confused.

Finally, one other very important observation on this. It has been interesting to note in the week since this was announced how virtually no-one in the media, either pro or anti Chavez, has anything to say about it. This was clearly the biggest and most significant part of Chavez's announced changes yet it gets hardly any mention.


Simple. The rich, their mouthpieces in the private media, and even the anti-Chavez blogs who like to hyper-criticize everything aren't going to complain. This change is putting huge amounts of money back in their pockets so they prefer to celebrate it quietly.

The Chavista media also stays almost completely mum about it. Makes sense, after all what are they going to say: "President Chavez just proved what a great socialist he is by giving billions in tax breaks to rich capitalists"?

So the rich shut up because they just got a whole lot richer and the government supporters say nothing because they can't cross "El Commandante". Meanwhile, your average working Juan just got shafted.

Now we see why in the RCTV debacle they never did what I wanted - turn the media over to popular control decided through voting. As it stands now, only the rich or those with government positions have access to the media. Everyone else is shut out. And given how the rich and the government just colluded to screw everyone else that is exactly how they want it.


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