Daily Archives: August 24, 2012

A “perverse” new tax to the dollar in Bolivia

Raising taxes is not an easy task, although many people may think different… in this case current Bolivian government has raised a new one, in an attempt to reduce the dollar currency in our economy, whereas is out of hatred to the USA or to show how ‘strong’ is our currency, the most affected continue to be our national industry and people who receive remittances from abroad.

It is naive to think that this new cost will not be passed to the society, at the end ALL is ‘paid’ by society.

El Diario reports:

CNC qualifies as “perverse” to the new tax dollar

Businessmen remind that the economy needs another type of measures such as the strengthening of the productive apparatus, the incentive to private entrepreneurship and investment security.

The National Chamber of Commerce (CNC) described as “perverse” for the national economy, to tax the sale of foreign currency (IVME), which is included in the draft law amendments to the General State budget (PGE), submitted by the Ministry of economy to the plurinational Legislative Assembly for discussion.

“The tribute announced that it taxes revenues obtained by banking, non-banking entities and foreign exchange facilities on the sale of dollars, affect the competitiveness of exports and will tax imports, which is, moreover, perverse for the national economy”, says a press release from the entity.

Oscar Calle, President of the CNC, reiterated that in the event the Law is adopted, the financial system institutions and exchange bureaus will transfer this 0.70% tax to each taxable customer operation.

“The assumed extent will result in banks and exchange bureaus to stop making the marketing of foreign currency, which somehow affect companies that perform imports.”

The Authority stressed its conviction that the generation of higher taxes is not the appropriate response for an economy that needs other kinds of measures such as the strengthening of the productive apparatus, the incentive to private entrepreneurial activity, security for investments, inter alia.

“If customers buy $100, the entities will have to pay a tribute of 0.70 cents if they acquire 1,000 then pay $7.” “The implementation of this tax has the goal of discouraging foreign currency operations and promote the policy of using local currency [Bolivianos]”, adds the document.

EXPLANATION

The Minister of economy and public finances, Luis Arce Catacora, stated that this new tribute will not be paid by the public, but to private banks and exchange bureaus that profit millionaire revenues with the buying and selling of dollars.

He said that the tax will be charged to private banks and exchange bureaus “at the time of the completion of the sale of foreign currency” and repeated this new tribute will not be charged to those who sell, for example, dollars, according to a press release.

“We have heard some false assertions that it would be possible to transfer this tax payment to the public”. False. “You won’t be able to transfer this tax because banking, financial institutions, exchange houses that are buyers and sellers of the currency, could not buy at one price less than the established officially by the Central Bank and would not sell at one price greater than the official exchange rate”.

According to the explanation of the authority, at this time the official exchange rate sale has a ceiling of Bs6.96 per dollar and the minimum official exchange rate for purchase is Bs6.86 per dollar.

So by this official exchange rate, for every $100 a customer should pay a maximum of Bs696. However, the BCB authorized that “the financial system to buy and sell with a point of difference above or below”.

That is to say that the private financial system can raise a penny to the price of the dollar (Bs6.97) for the sale and lower the price of the dollar when purchasing by a penny (Bs6.85).

“In this range of Bs6.97 and 6.85, banks and financial institutions buy and sell dollars to the public.” Therefore, the most one can pay for purchase, still in force of the proposal of tax that we have submitted to the Assembly, is Bs6.97. “Not going to pay more,” he explained.

CONTROL

Arce Catacora recalled that the BCB and the authority of Supervision of the financial system (ASFI) are the institutions responsible for controlling brokering in the buying and selling of dollars and regulating the work of private banks and exchange bureaus.

Anticipated that there will be sanctions for financial institutions and exchange bureaus that do not comply with the regulations in force.

“It is allowing operations in foreign currency.” They can continue to operate. However the only thing being searched is that, that operation, that transaction with foreign currency are more expensive, not to the public, but to banking, non-banking institutions and exchange bureaus. “As simple as that,” said the authority.

http://www.eldiario.net/noticias/2012/2012_08/nt120823/economia.php?n=15&-cnc-califica-como-perverso-al-nuevo-impuesto-al-dolar

In addition, the following cartoon portrays our current economy status:

This is from El Diario, August 23, 2012:

A balloon goes up lifting the primary consumables that a household needs.

Desperate attempts to keep it low is being made by ‘control prices’ the minister of finance and the ‘consumer defense’ while a mother and children are doing their best…

In economics anything can be justified, anything can have an explanation, however at the end of that activity the results will be surprising to most, specially to those who ar in charge on the economics policies of a nation…