Saturday, April 23, 2011

When taxation without representation becomes mere highway robbery: Chavez robs the Venezuelan treasury

This week is holiday in Venezuela and traditionally even Chavez had a more moderate approach in what still remains a traditional country, albeit not very religious anymore.  But strapped for cash Chavez decided to use the holiday lull to make a preemptive strike in what basically accounts to a mere robbery of the public treasury to use it as he pleases.  Really, I kid you knot, with the new decree law announced last night Chavez will have a few extra hundreds of million USD (up to a couple of billion depending how oil prices vary) to spend as he wishes, without legislative control, without any form, of accounting whatsoever.  And that money he steals it directly from locally elected authorities, that is town halls and governorships.

That is, Chavez will deprive your local elected people, those that sweep the street, fix potholes, pick the garbage, etc...  of the means to do their job while he will spend that money on weapons, his pet projects and mostly on corruption and vote buying.  Chavez will take the money from which your quality of life depends to use it as he wills.

It was important to stress the consequences of that decree before I explained how that robbery took place.

The Venezuela budget was calculated each year according to the average oil value of the barrel, sensible since oil exports have become more than ever our all but lone source of foreign currency.  Supposedly if the oil prices are above the expected income, that difference is deposited in part in a rainy days fund and in part distributed to communities and new projects.

All of these provisions  have been done away with chavismo.  Now the budget is grossly calculated at a ridiculous oil price, LESS than half the expected average, and all the "surplus" money is sent to special funds that the executive power of the country spends almost at will, with extremely minimal control.  This is the reason while corruption has been so fueled under chavismo, reaching calamitous proportions.  Needless to say that the rainy days fund has become symbolic, explaining in part the crisis we have been enduring since 2008.

This year started with a calculated budget at 40 USD the barrel when it was already hovering at 70 USD.  Now it is around 100 USD and experts think the way things are going the year average will be significantly above 80 USD, which means that at the very least a third of the Venezuelan budget will be spent without going through the National Assembly.  At least a third.  Wrap your mind around that, at least a third of Venezuelan income from your very own taxes to whatever we get through oil will be spent by the executive branch without this one needing to do any accounting, presenting any project, and even less discussing projects etc...

And that third is in fact higher since the official budget already gives quite a discretionary amount to the central executive as the regime has consistently cut down on what the individual states should get according to the Constitution.    In fact, this latest decree of Chavez is also an insult as all the Venezuelan regions, chavistas or not, already very short in cash and often without enough of it to even meet basic payroll, will not see a penny of the extra bonanza coming at oil prices above 40, never mind at 100.  Nobody knows anymore how the black box of the Venezuelan budget works but it fair to say that more than half of it probably cannot be audited, ever.

But it gets better, or worse depending on your angle.  Chavez gets that extra cash through a law decree that increases significantly the taxes on oil above a certain price.  In a way, as a Venezuelan, if that straight income were to be shared among all the diversity of the territory I would cheer, but I will not, and not only because the large chunk of it will be wasted on corruption and vote buying.  What worries me to no end is that the oil companies, Venezuelan or foreigner for that matter, will now be taxed so much that once they remit any dividend to their investors, there will be not enough money left around to invest to keep up oil production, amen of increasing it.  Yes, I include all oil companies, even PDVSA because Venezuela as THE investor of PDVSA will cash in all of its earning and give them to Chavez for vote buying and corruption; not to keep up the company, which is already in trouble, and which has a bloated payroll.

And yet insult and injury are not over.  The excuse for such a robbery makes this law decree a "taxation without representation" text book case.  Chavez uses the illegal enabling law voted last year by the illegitimate lameduck assembly to raise taxes.  That is, the enabling law was so large that Chavez does not need to send the laws he really cares about tot he assembly, he just signs them and voila.  In case you forgot, the original excuse for the enabling law was to decide a few measures to help the rain emergency of last fall, not to raise taxes at will,  But the enabling law allows for that, robbing the national assembly of that key constitutional provision.

We do live under a dictatorship, got it?

PS: by the way, we are on the verge of a new rain emergency.  And yet this time around Chavez could not care less.  Now that he has used the last one as an excuse to establish his formal dictatorship, "el pueblo" can drown itself as it wishes.


  1. Anonymous7:17 AM

    I'm sure you've already heard about this: Russian had a stroke ( ).

    I can imagine Bolivar's Ghost right now saying (with his best Maxwell Smart voice) "I missed him by this much."

    I'm glad he's not dead though. Mostly because I had $20 on "Marciano" being the next one to suffer the anger of Bolivar's Ghost.

  2. England Calling8:25 AM

    But will the poor chavistas in the barrios , or any of the chavezs militia understand or even take any notice of any of this.....I doubt it :-(

  3. well Daniel,you have to understand that imperialism is hard to deal with,but they're doing a tremendous job,that is reflected on their bodies and souls to fight against the imperialist and capitalistic claws of darkness.

    And there is no rain.
    The houses are being built and there are no such thing as homelessness in Venezuela.

    well this is all i had to say
    Viva Cuba!
    Viva la Revolucion Cubana!
    Viva chavez!
    Patria Socialista o Muerte!


Comments policy:

1) Comments are moderated after the sixth day of publication. It may take up to a day or two for your note to appear then.

2) Your post will appear if you follow the basic polite rules of discourse. I will be ruthless in erasing, as well as those who replied to any off rule comment.