Girish Gupta

HOME

PHOTOS

ONLINE

Twitter
Instagram
IFTTT
Facebook
LinkedIn
Keybase
GitHub

BY COUNTRY

Brazil
Colombia
Cuba
Ecuador
Egypt
Guyana
Iraq
Jordan
Lebanon
Mexico
United Kingdom
Venezuela

BY MEDIUM

Text
Photo
Radio
TV/Video

BY PUBLISHER

Al Jazeera
BBC
BuzzFeed
CBC
Christian Science Monitor
CNN
Daily Mail
Datum
Ecologist
Economist Intelligence Unit
Emerging Markets
Financial Times
Foreign Policy
France 24
Fusion
GlobalPost
Guardian
Independent
La Prensa (Panama)
LatinFinance
Mancunion
Monocle
National (Abu Dhabi)
New Internationalist
New Statesman
New York Times
New Yorker
NPR
PBS
PRI
Radio France Internationale
Reuters
RTE
Sky News
Sun
Sunday Times
Telegraph
TIME
Times of London
USA Today
Vice
WLRN

ABOUT

About
CV
Contact (PGP Key)
Government announces new taxes on luxury goods
Nov. 20, 2014 — Caracas, Venezuela

Published by Economist Intelligence Unit

Event

Taxes on high-end items deemed luxury by the government are to be raised, in a move by the president, Nicolás Maduro, to boost the country's ailing economy.

Analysis

In a four-hour speech, Mr Maduro announced 28 new laws, passed by decree, to tax heavily the purchases of yachts, private jets, alcoholic drinks, cigarettes and other items deemed "excessive" by the government. The measures are yet to appear in the official gazette and will not become law until they do so. The amount of the tax increases vary widely: for yachts and jets, taxes will be increased from 10% to 15%; for alcoholic drinks and cigarettes, the increase could be as much as 50%, a surprisingly high jump just before Christmas, with Venezuelans already struggling with rampant inflation.

Although the underlying goal of the tax increases is to boost fiscal revenue, by taxing luxury goods the government is also making a strong statement to its political base that the wealthy remain the enemy of the revolution. Mr Maduro made no mention in this speech of raising the world's lowest gasoline prices, which cost the government as much as US$12bn annually.

Although a step in the right direction, the changes announced by Mr Maduro will have little impact on the public finances. Annual inflation, last reported in August, is more than 60%. As 96% of Venezuela's foreign income comes from oil, the recent slide in prices for this commodity is likely to be worrying the government, although it denies this. The fall could force more pragmatic policies, although enacting any reforms that are not in step with the president's base could be politically dangerous for him. Dwindling foreign reserves, which have fallen by 30% since January 2013, have been boosted by US$2bn in recent days to US$21.4bn. Mr Maduro indicated during the speech that US$4bn would be added from a loan from China; the recent US$2bn addition is believed to be part of this amount.

Impact on the forecast

The latest tax policy announcements will have little impact on the public finances and, as a result, we have made no changes to our forecast at this time. However, we will revisit our estimate for the foreign-exchange reserves for end-2014 to reflect additional inflows from China.

Filed from
Caracas, Venezuela






More...

Exclusive: At least 123 Venezuelan soldiers detained since protests - documents
Jul. 6, 2017


Venezuela hikes minimum wage 50 percent, effectively down 17 percent
Jul. 2, 2017


Venezuela movie actor behind helicopter attack on government buildings
Jun. 28, 2017


Fourteen Venezuelan army officers jailed in first week of protests - documents
Jun. 6, 2017


Exclusive: U.S. considers possible sanctions against Venezuela oil sector - officials
Jun. 4, 2017


Exclusive: Trump administration concerned about U.S. firms giving financial 'lifeline' to Venezuela
Jun. 4, 2017


United Airlines ends flights to Venezuela, further isolating country
Jun. 3, 2017


Venezuela sets new exchange mechanism, as currency continues to slide
May. 24, 2017


Exclusive: Venezuela holds 5,000 Russian surface-to-air MANPADS missiles
May. 22, 2017


Venezuelan opposition activists march to Leopoldo Lopez' jail
Apr. 28, 2017


Venezuela says inflation 274 percent last year, economists say far higher
Apr. 20, 2017


Venezuelan protests against government leave three dead
Apr. 19, 2017


Venezuelans return to streets, roused by ban on opposition leader
Apr. 8, 2017


Venezuelan opposition, security forces clash in anti-Maduro protests
Apr. 6, 2017


Venezuela security forces battle anti-Maduro protesters
Apr. 4, 2017








© Girish Gupta