One of the worst tax systems

A precise Editorial from Pagina Siete:

Although this is already known, it is still news, and worrisome news: Bolivia has one of the worst tax systems in the world. According to the Doing Business ranking, prepared by the World Bank for 2019, the country ranks 186th out of 190 countries investigated. [Bolivian Thoughts opinion: The WB site has Bolivia as 156 while Pagina Siete as 186, in any case the conclusions are the same, Bolivia has the worst tax system in the region! To get the WB’s report on Bolivia, please click on this picture:]

All Bolivians who try to make a business or formal activity know it: from dentists or psychologists who serve in their offices, to owners of stores or restaurants, going through the few who dare to do formal productive or agricultural activities, they know that the system tax in Bolivia is a real hell, worsened in recent years by the abuse of national taxes, which almost in 100% of the cases wins the proceedings against private. Do you think that on occasion the dentist or the seller of jams or the owner of a kinder who complain about excessive or poorly calculated charges can win a process to National Taxes? Of course not.

The recently published study of Doing Business is hopeless. In Bolivia, 42 different taxes are paid during the year, while the average for Latin America is 27.1 taxes and for developed countries, 11.2. Hong Kong, the best country in this regard, only charges three different taxes.

The “person hours” allocated to that tax payment is 1,025 in the year. They are the hours that the messengers or the accountants of the companies spend in the banks, in the offices of national taxes and in other entities, paying taxes! The average in Latin America is 330 hours, while in developed countries it is 159.9 hours per year. Singapore is located in the first place, with 49 hours dedicated to it.

The situation is extremely serious because this study shows that in Bolivia, 83.7% of total profits are paid in total taxes (national, municipal, etc.). It is the highest figure in the world, together with Eritrea in Africa (Argentina and Comoros appear with more than 100% of tax on profits, but this is due to calculation difficulties by exchange rate).

The average of Latin America as a percentage of the profits paid is 46.7%, while the advanced countries charge 39.9%, says the study. Bolivia charges twice that. It is a devastating situation.

The Bolivian model, as we have said before in these pages, is based on external credits and the collection of taxes. Everything to continue to insufflate money to the economy and give the impression of growth. But it is a model that does not bet on productivity or decent employment.

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