Brilliant post OW.
The Seniat seems to be a real success story, and should be a role model for many countries.
It's always a sticky question of how to address the issue of tax collection.
Unfortunately it begs the question of property rights, which is one of the most polarizing issues in political discussion. At the very root of the issue is what the individual actually owes the government... and it questions the implication that the government "owns" the people in some sort of feudalistic sense. I'm not going to address that here. There is one issue I will address that ought to be covered if this is truly the marketplace of ideas:
"Refusal to pay taxes is not a victimless crime. It is theft from the government which is starved of the funds it needs to provide services. Or it is theft from your fellow citizens who must now pay more taxes to make up for those who refuse to pay."
It is also true that stealing electricity (extremely commonplace by the poor- who simply hook a wire on the nearest power line)is not a victimless crime. It really isn't the money, though, as much as it's the issue of theft. To tolerate some forms of theft (and then only by certain classes) is no different from the "corruption" of tolerating a different form of theft by a different class.
To favor one class over the other is just as wrong when the underclass is favored as when the wealthy class is favored. Either one will create a tyranny... and it doesn't matter whether they are rich or poor: tyranny is not the goal to shoot for.
OW - this was a very informative post - there seems to be almost a Germanic efficiency about collecting tax, and I am impresssed also with all the incentives to pay. I recall, you said previously - advertising all over to let people know what the taxes are being used for.
I just want to be sure I understand this part - are the tax laws not to different from what they were when passed by previous administrations, and the only significant change is that the tax laws are being ENFORCED?
Are the tax forms pretty simple?
Are any local taxes collected by particular states or cities? Land property taxes?
FOR COMPARISON ----
Property taxes are something like 3% of the value of the house + land in Toronto, and they pay for maintenance of streets, sewers, welfare, etc. Property taxes for residents in Toronto range from about C$3000 per year to maybe, C$30000 on ritzy mult-million dollar houses.
Here is a site comparing taxes in Canada and the US.
http://www.dopejam.com/byecanada...iding/
taxes.cfm
Actual sales tax in Ontario is about 15% when you combine Ontario and federal sales taxes.
The Province of Alberta has 0% sales tax because it gets money from oil and gas royalties.
The TOTAL tax burden on the US states around the Great Lakes is supposed to be higher than in the Province of Ontario.
Unlike the US, hospital and doctor care is free, and drugs are about 1/2 to 2/3 of the US cost - which is why there are stories about US pensioners going over the border to buy them in Canada.
The US is a better place to live if you are wealthy. Is it a better place for the wealthy of Venezuela?
To Expat - I remember a story about people in poor parts of Indian cities stringing wires to steal electricity. It looked like a dangerous thing to do.
Maybe it could be stopped on the grounds of public safety. Does this sort of electricity theft go on all over the poor areas of Venezuela, or just on this island where you live?
Maybe one solution would be to provide a certain amount of free electricity to everybody, but install meters so that they pay extra if they are wasteful. This way, conservation would be encouraged.
One could do the same with water too.
Good post dude, that said I don't remember paying sales tax in 97 ANYWHERE where they heck did that 5+ billion figure come from?
"It is also true that stealing electricity (extremely commonplace by the poor- who simply hook a wire on the nearest power line)is not a victimless crime. It really isn't the money, though, as much as it's the issue of theft. To tolerate some forms of theft (and then only by certain classes) is no different from the "corruption" of tolerating a different form of theft by a different class. "
E.A. I would agree. And this isn't a problem only in Venezuela. Here in the U.S. I know lots of people who get bogus cable boxes and get to "steal" the cable TV that I have to pay for. It also happens with electricity but to a lesser extent because you have to tamper with the meters which isn't so easy to do.
So that would be a problem that would have to be dealt with by the utilities. As it is I think its really the government picking up the tab for that but it would be better if it were formalized through subsidies rather than just being ripped off.
"I just want to be sure I understand this part - are the tax laws not to different from what they were when passed by previous administrations, and the only significant change is that the tax laws are being ENFORCED?
Are the tax forms pretty simple?
Are any local taxes collected by particular states or cities? Land property taxes?"
Yeah, the taxes are the same. The only new one is the banking transaction tax which doesn't even account for all that much money. Also, some previously exempted groups lost their exemptions. But overwhelmingly, this is the result of improved enforcement.
The tax forms are pretty simple compared to the U.S. just because there are so fewer many laws and deductions and exemptions. I have a link to examples I can post later. Also, everyone is supposed to start doing their income taxes on the internet this year.
Yes, localities collect taxes too. About a month ago the mayor of Chacao, one of Venezuela's richest localities, who is an opposition supporter was publically complaining that not nearly enough people there were paying taxes and his government was therefore cash starved. Of course, enforcing the law like Seniat does appears not to be an option for him because his wealthy constituents would probaly vote him out.
Flanker, the 5 billion in 97 would have come from a couple of places. First, its big ticket items that it is easiest to collect taxes on, not smaller things like clothes and shoes. So unless you were buying cars or appliances you may not have noticed it.
Also, they may not have been required to itemize the tax on reciepts like they are not. In theory that tax is still there. That is, if you buy a book for $10 and the IVA is 10% then $1 dollar of what you paid is tax, even if it wasn't listed that way to you. Problem is though, most stores will WAY undereport their sales to avoid taxes. But they would have to report something and pay tax on that lower amount. Evasion generally doesn't consist of paying nothing. It is hard to get away with that. It consists of way underpaying.
BTW, I saw you linked to a very informative Datos slide elsewhere. Where did that come from? Are there others?
OWL
I've seen the illegal hookups all over Margarita as well as Puerta La Cruz and the parts of Sucre that I've visited.
Obviously the thing to do is make a policy decision and decide that if the poor are going to get free electricity, give them a meter that only gives them so many KWH. At least that way the electric grid could be regulated and there wouldn't be the brownouts and blackouts that we have to live with during the tourist seasons.
My point was that if the Chavez government is going to really make a lasting change on Venezuela they have to be just and right on an institutional level. There will always be class conflict, just like "the poor will be with you always." The role of the government is to propagate equitable and just laws and then apply them equally to everyone.
It will be very difficult to get long-term growth in a country that accepts as part of its culture that theft is acceptable behavior... which is why the electricity thing bothers me so much.
For some reason, it seemed like the SERIAT tax collection murals were painted in the more upscale Caracas neighborhoods when I was there.
Don't recall seeing them in places like Petare.
If true, must be aggravating for them.
"For some reason, it seemed like the SERIAT tax collection murals were painted in the more upscale Caracas neighborhoods when I was there."
Thats where people who make enough money to pay taxes live so thats where you focus your efforts. At least in Venezuela. In the US, of course, they focus tax collection efforts on the middle class, not the wealthy. Thats what happens when the rich control the government.
Well the thing is that the IVA was instituted around 93-94 I believe and it was applied for like a split second after that it was not noticed at all and I highly doubt it was included already on the price.
That said I do have something I disagree on, I don't believe the link between hating Chavez and tax collection is that solid, it is a bit more complex than that. Chavez hating started before he got elected and it had more to do out of fear of losing their private property, the opo fears becoming Cuba (unsubstantiated I know) not becoming like Sweeden, my old man was against Chavez well before 98 and he always argued that tax evasion was a negative, of course he could not evade paying his income tax 
The Datos thing was linked by Ruben here a while back.
http://www.datosir.com/images/
pe...ectivas2006.pdf
Flanker,
Thanks for the link.
Of course, the hatred for Chavez doesn't spring from just one source. There are many factors behind it and different people have different reasons. Indeed, I have heard some opposition supporters speak well of what has been done with Seniat. That said, I have heard a great many compliants about it and would say it is probably the single largest factor that people (particularly non-Venezuelans) haven't heard about.
Wow--a crash course in Venezuelan tax enforcement! Good stuff.
There goes one more oppo myth (of how many already? 
)--the idea that socialist governments are less efficient, and that they are lax enforcers. Um, yeah...right. And the Puntofijistas had HOW long to tackle THEIR problems in this arena? 40+ years?
Somehow, though, I still get the feeling that the real reason that so many of them hate Chavez is as simple as black and white--or rather, brown and pink. As in, he's brown--they're pink. And they think no one but pink people are fit to rule a country that's mostly brown...
BTW, this is off topic, but I had to share:
http://www.vheadline.com/readnew...ws.asp?
id=51160
"100 MPs have now added their names to Colin Burgon MP’s Early Day Motion (EDM) in the British Parliament supporting the democratic process in Venezuela and urging the UK government to pursue a policy of constructive engagement with the country.
"The Venezuela Information Centre (VIC) has been strongly lobbying MPs to support this initiative and is now asking all our supporters to check the list of signatures to the EDM and get their MP to sign if they’ve not yet done so."
There's more...read the whole link.
100 British MPs out of a parliament of how many, again? Damn. That's FANTASTIC. And even some Conservative MPs, whom you'd not expect to do anything but spit on Chavez's name, are positive on this...
And yes, the economic and social programs Chavez put in place are a major reason for this huge show of support.
There are 600+ in the House of Commons, what is mostly positive IMHO is also the lack of false accusations of democracy civil rights etc, Even from conservatives, their only criticism was the business enviroment, it could change though but as of now the UK is one of the best friends Venezuela has in Europe.
There are 655 MP's in the British Parliament.
The TUC supports Venezuela officially and represent 6.7 million workers.
The House of Commons has 646 members, according to Wikipedia.
They are an independent lot, and are quite capable of getting rid of a Prime Minister, as they did to Margaret Thatcher.
Rubén Castañeda - you are most likely right - a larger number is more reasonable. I just haven't found the number through Google yet.
OW -
I thought it was fascinating that the people in the rich area of Caracas did not want to pay their taxes, and the mayor was complaining. Just who do they think should be paying for maintaining their local infrastructure? The federal government? I would think that a fellow like Cisneros would want his neighbourhood to be well-maintained.
Maybe the mayor of Chacao should consider hiring Seniat to help him collect the property taxes. Or maybe he could ask the US for foreign aid 
No, Owl, you are right. It is 646.
http://www.parliament.uk/
directo...tateparties.cfm
"I thought it was fascinating that the people in the rich area of Caracas did not want to pay their taxes, and the mayor was complaining. Just who do they think should be paying for maintaining their local infrastructure? "
Owl, you got it. Like the rich everywhere they want someone else to pay the taxes. So the Venezuelan rich think all the monies for maintaining their areas should come from the oil revenue, not as the result of taxing them. In fact there are editorials in the opposition papers like El Universal where they say there shouldn't be any taxes at all in Venezuela as the oil money should cover everything. Thats part of why they are pissed at Chavez - he uses the oil monies to pay for health care and education for the poor rather than to fix their streets.
Even foriegn oil companies need to keep their books in order:
SENIAT
Total reabrió sus oficinas tras cierre de 48 horas
Texto: AFP
Caracas
La petrolera francesa Total reabrió ayer sus oficinas administrativas en Caracas tras cumplir 48 horas de cierre ordenadas por el organismo recaudador de impuestos de Venezuela (Seniat).
Una ejecutiva de la petrolera confirmó a la AFP la reapertura de las oficinas pero indicó que la empresa no tiene ninguna declaración sobre su situación impositiva en el país.
“El Seniat cerró el jueves las oficinas administrativas de Total por incumplimiento de los libros (...) y por incumplimiento de la facturación en algunos renglones2, según declaró entonces el Superintendente Nacional Tributario, José Vielma Mora.
El organismo dijo que esperaba hasta esta semana para que la empresa admita el reparo y comience a pagar.
Well, the situation would be all rosy, until you go and talk to an actual employee of a store fined or closed by the Seniat aggressive efforts:
It then turns out that the auditors get a bonus for every store they fine or close. Grreat for them. Bad for the stores.
It then turns out that you can be closed because you did not include in the bills some information the Seniat wanted there. Like the telephone number or address of customers. With foreign customers they had to do some really creative reporting.
What about the privacy of said customers? I was in Venezuela in December and buying was a bothering and unsettling experience with everyone asking your name and telephone number just to sell you anything.
I live in Italy mostly, and even as the state and collection agencies are onerous here, they show nowhere near the aggressiveness, inquisitiveness or hostility of the SENIAT as regards businesses and their customers.
And I remember that a lot of stores were not closed for cheating on the subject of IVA. But for minor omissions in their bills and general tax reporting.
And lastly, given that that inmense revenue is not accounted for, even more so than in the Fourth Republic, what about...
No taxation without representation?
Not accounted for? I think you missed this:
http://oilwars.blogspot.com/
2005...ansparency.html
When you purchase something you only are required to give one piece of information - your cedula number or if you are not Venezuelan your passport. Hardly an invasion of privacy. When you purchase something with a credit card you are generally forking over a lot more information. Or when you get on an airplane. Or when you even file a tax return. Its long since accepted by pretty much everyone (liberterians excluded but I don't believe there is really such a thing as a liberterian anyways)that the government has the right to collect information to collect taxes or ensure public safety or provide basic services. So forking over a peice of ID is a non issue.
Lastly, I'm not going to feel sorry for the "victims" of these closures. Its the responsibility of the business to follow the law and if they didn't follow it they are the ones responsible for the consequences. I do feel sorry for people who have to pay higher taxes to make up for all the cheats though.
speaking of taxes pissing people off:
http://economia.eluniversal.com/
...rt_22202E.shtml
There will now be an assetts tax that will hit second homes of over $200,000 in value. There will be yet more ire in eastern Caracas.
Very interesting post, thanks.
For local taxes collected by states or cities who is recovering them ?
In France their are local taxes that are being asked by local powers but it's a central national system that make sure it's paid. Isn't it the same in Venezuela ?
No local taxes I believe are collected locally. Plus the states get 20% of the oil revenues. They may also get a percentage of federal taxes - I'll have to check that.
Businesses that are the "victims" of tax evasion have no one but themselves to blame.
PERSONAL RESPONSIBILITY--hello! Wouldn't it be nice to see these capitalists EXERCISING some themselves for a change, instead of just preaching it at the poorest?
And if they won't--too bad. So sad. It's not as if there's any shortage of 'em.
It's not about paying taxes... it's about being closed for not having a bit of information in the bills.
And if there is no accounting from the government of the taxes they TAKE FROM YOU WITH FORCE AND ARMS, well, I do not advise to break the law. But it is robbery nonetheless...
"I live in Italy mostly, and even as the state and collection agencies are onerous here, they show nowhere near the aggressiveness, inquisitiveness or hostility of the SENIAT as regards businesses and their customers" (Lorenzo Albano F.)
Yeah, and Italy is notoriously a country where tax evasion has become utterly routine.
Lorenzo,
You just have to obey the law and pay your taxes. I don't agree with what all my taxes pay for but I pay them none the less.
And if my paperwork isn't in order I have to deal with the consequences. Thats how it works in any country at all serious about collecting taxes.
Lorenzo essentially advocates FRAUD and UNACCOUNTABILITY. Lovely!
BTW, Lorenzo, speaking of robbery: How do you live with yourself and your sentiments, knowing that what SENIAT collects helps to feed and educated and medically treat poor kids in the barrios? Just curious.
Sounds like ow would love the IRS here in America that has destroyed hundreds if not thousands of lives from their heavihandedness and unjust prosecutions.
The government has unlimited resources to destory a person in these cases and it is difficult for a small business owner or individual to afford good legal representation when the government seizes whatever you have.
"Obey the law!" Very statist and fascist; you should apply for a position in the Chavez government.
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Outstanding!
This might be one of your most falacious posts ever! Congratulations on that.
According to official figures (WDI):
Current GDP in US$ (NOT PPP ADJUSTED) was US$ 85,8 Billions in 1997 and US$ 140,2 Billions (PPP adjusted was around 175 Billions).
First of all, praising tax revenue efforts in nominal terms is a nonsense, it's tax/GDP figures what matters.
Using your own tax figures we can conclude that tax revenue came from 11.9 GDP points in 1997...to (Wow!) 12.7 GDP points in 2005
A very anemic rise of 0.8 points during Chavez era, far far far below your manipulated 6 points of GDP in the post.
You did not ask, but in my opinion tax preasure in Venezuela is unacceptably/inmorally low, I just don't buy the Super-SENIAT history you propagandist bichito are trying to portrait.
Saludos
"Refusal to pay taxes is not a victimless crime. It is theft from the government which is starved of the funds it needs to provide services"
Actually, taxes are government's theft from individual's well earned income.
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