Daily Archives: May 1, 2013

Bolivian taxes 101

Juan Jose Toro Montoya writes for Los Tiempos:


Juan Jose Toro MontoyaThe State is the common house and, as all home, need money to support itself. That is the simplest explanation for the existence of taxes or taxes that are not anything other than the payments we make the inhabitants of the common house to keep it running.

If things were so simple, no country would have problems with taxes, but given the nature of each of them, there are different logics.

But beyond these differences, there are general rules that are applicable to all by themselves, and one of them is the universality of the tribute; i.e., the obligation that all inhabitants of a country have to pay taxes.

Do they justify that universality? My tax law professor, Carlos Araníbar, reminded me that: we are all debtors of the State and pay our debt through taxes. And what happens if someone doesn’t pay taxes? The answer is just as simple: is an evader.

Yes. So far everything seems clear, but like everything else, another thing is with a guitar… or calculator.

The case of Bolivia is unique. As in most countries, tax is differentiated but not based on income that each inhabitant earns, but the declared capital. The difference in the capital and an element, the socio-economic status, gave rise to the simplified tax regime; that is, a special category in which their beneficiaries – because they are such – are exempted from obligations that are common to all taxpayers, including the issued invoice or tax.

The little trap is, precisely, to the regime. Those who wish to free themselves from certain tax obligations, take refuge in it and goodnight shepherds.

Arises, then, inequality as some pay taxes of one way and others another. Does this go against the universality of the tribute? To answer that question, it must first be understood, on the one hand are the taxes per se, those who we all must pay, and on the other hand, there is the consumption tax, which in our country is defined as IVA that is paid when performing any type of transaction.

Those who don’t pay taxes confuse things. They believe that when they pay the IVA, they are already meeting their tax obligations and that is not true. What should do, apart from IVA, is to pay their contribution or State fee according to their income.

The detail is that all these basic issues collapse in Bolivia and enter in crisis due to an important detail: we don’t have a tax paying culture. Because of this ignorance, the majority of taxpayers are looking for a way to pay as little as possible and that is the explanation that the simplified tax regime remains until today despite the fact that when it was put in force, it was established that it had a transitory nature. [and on top of what the author if this article says, the ones who complain the most about the services rendered by the State, like infrastructure, health, education, are the ones who DO NOT PAY AT ALL!]

When the State touches the issue of taxes, those affected jump, they block the streets and highways, they declare themselves in a state of emergency and announced that they will take their actions “until the ultimate consequences”. Moreover, they reach extremes as in Potosí where the mining cooperatives’ affiliates came to set fire to the building’s taxes when attempted to introduce modifications to the differentiated IVA paying for this sector.

We all live in the common house but do not wish to contribute to its maintenance. And we still have the cynicism of demand the required services and benefits!

The author won a national award in journalism history.