The Miami Herald
October 11, 2007
Life is about to get tougher for Venezuelans who drink and light up.
President Hugo Chávez has announced sharp tax increases on tobacco and alcoholic beverages, amid a raft of other measures aimed at curbing luxury imports and instilling the new morality of his ``21st Century Socialism.''
Some analysts say the tax increases have less to do with morals or public health than with the government's realization that it faces a substantial shortfall in income as a result of recent measures intended to curb the highest inflation rate in the region.
''We're one of the countries that consumes the most whiskey per capita in the world. We ought to be ashamed,'' Chávez said in berating his audience on his Hello President television and radio show. ``I'm not willing to keep offering dollars to import whiskey in these quantities.
What kind of revolution is this? The whiskey revolution? The Hummer revolution? No! This is a real revolution!''
U.S.-made Hummer vehicles have been reported to be selling briskly in Venezuela in recent months.
The announcement of the tax increases -- expected to take effect Nov. 1 -- coincided with ceremonies Monday to commemorate the death of guerrilla leader Ernesto ''Che'' Guevara 40 years ago in Bolivia. The government has adopted the Argentine-turned-Cuban revolutionary, who advocated the creation of a ''new man'' motivated by moral, not material incentives, as a symbol of its socialist crusade.
''Que sean como el Che! (Let them be like Che!),'' Vice President Jorge Rodríguez proclaimed at a ceremony Monday to unveil a plaque in the guerrilla's honor, echoing a famous speech by Fidel Castro.
But even the government concedes that today's Venezuelan ''revolutionaries'' often fail to live up to Guevara's ascetic ideals. Rodríguez, who previously headed the country's electoral authority, made headlines a couple of years ago when he crashed his new, silver Audi.
''Can anyone follow Che's example while riding around in a Hummer or drinking whiskey?,'' Information Minister Willian Lara inquired in a Monday newspaper column headlined ``Talking and acting coherently.''
The government has tools at its disposal to curb consumption of luxuries and indulgence in ''capitalist'' vices. Currency-exchange controls, in force since 2003, allow it to ration the flow.
After Chávez's attacks on whiskey and Hummers, tax chief José Gregorio Vielma Mora said there would be no more cheap U.S. dollars for alcohol imports, except wine from South America. Importers will have to buy dollars on the parallel market and at a steep markup.
Other measures have included attempts to ban the practice of selling beer from trucks in neighborhoods. ''I've told the National Guard to stop and seize any truck going around selling beer in the street as if it were ice cream,'' Chávez said.
Authorities are also considering imposing a luxury tax on items such as works of art and fancy cars. Economist José Manuel Puente said the government has had to bring in new revenue sources because it recently reduced the value-added tax by five points and introduced six new exemptions.
Puente estimated the lost tax revenue at 13,500 billion bolívares, or $6.28 billion, and said the decision to introduce the new taxes on Nov. 1, instead of in the new year, shows the government's fiscal policy is unsustainable.
The reduction in the value-added tax was an attempt to curb inflation, which last year hit 17 percent -- the region's highest. Imposing new taxes, likely to raise consumer prices, will make this year's 12 percent target even more difficult to achieve, analysts said.
The tax increases are part of Chávez's crusade to introduce ''socialist'' ethics, which include a new school curriculum and a drive to persuade Venezuelans to become model citizens.
''Old-style individualist, capitalist, egotistical values must be demolished,'' Chávez has said, ``and new values created.''
Puente described the rhetoric as ''almost evangelical,'' adding that ``it has very little to do with designing genuinely progressive policies.''