Who Pays the Bill?

By Pasqualina Curcio – Aug 3, 2020

This is the title of OXFAM’s latest report from July 2020. In that report they propose that in order to face the Covid-19 crisis in Latin America and the Caribbean it is necessary to tax wealth, that is, without being revolutionary or socialist at all, they propose, in the midst of a significant contraction of the economies in our countries, it just makes sense to tax those who have more, the rich.

The cake that represents the economy of Our America is 9.4% smaller compared to 2019. The main reasons are known and are related to confinement, a measure adopted to reduce the spread of the virus, which in turn has forced production and marketing companies, whether public or private, to close their doors and therefore reduce production.

The problem is not only that the cake is smaller and therefore there is less to distribute, but also, as if that were not enough, that cake which historically has been very unevenly distributed, now in a pandemic, is being distributed even more unevenly. It is the case that while in Our America 40 million people are expected to lose their jobs this year and 52 million to fall into poverty, paradoxically in three months, and despite the reduction of the cake, there are 8 new billionaires in the Region and the fortunes of the richest people have grown 17% (US$ 48.2 billion).

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“It is clear that the crisis does not affect us equally, there are those who have lost much and yet continue to contribute with care, work and taxes to this common effort. We cannot demand more from those who have less. This crisis cannot be paid for by those who have always been here. It is time for those who concentrate the wealth to contribute much more to the effort of all. (OXFAM, July 2020). Any resemblance to our Venezuelan reality is just a coincidence.

In view of this situation, OXFAM proposes to redistribute the cake. It proposes a tax on the net worth of the richest people; increases the tax burden in the region to 23.1% (in Venezuela it does not exceed 9%); charges taxes on extraordinary profits of large companies and reduces the tax burden on households. In this regard, they state: “In a period of crisis in which families have reduced or lost their sources of income, they cannot be required to make further sacrifices through taxation. Fiscal support already falls disproportionately on families, especially through taxes on consumption. Of the total tax revenue 51% comes from taxes on goods and consumption In Venezuela it is not 51%, it is 86% according to government data.

Who pays the bill in Venezuela?

The cake representing the Venezuelan economy was halved between 2012 and 2018. The main reason is known, an economic war on the part of imperialism that ranges from a financial and commercial blockade, especially against our government-owned oil company ( PDVSA), to a criminal attack against our currency. The economic losses caused by this siege were estimated in March 2019, at that time amounting to US$ 125,792 million, a figure which the Republic reported to the International Criminal Court. We updated the calculations in June 2020. That amount is US$ 194,193 million.

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Both the blockade and the attack on PDVSA and the manipulation of the bolivar have affected the size of our cake, but among all of these factors, the ones that have had the most impact are, in this order: the manipulation of the bolivar by 66% and the blockade of PDVSA by 34%.

The fact that every day the exchange rate is politically manipulated automatically generates an increase in all the prices of the economy, except the price of the labor force (salary), and leads to a deterioration in the purchasing power of the salaried class. As we have nothing to buy with, those who produce are forced to decrease their production because they have no one to buy from them. That’s why the cake is smaller.

Recognizing that the attack on the currency is the most powerful weapon is very important, because while the President of the Republic, Nicolas Maduro, calls to turn on the engines of the economy and makes an effort to boost and push the much-needed production, imperialism, by attacking the currency pulls more strongly preventing the economic recovery. This is not the first time we have raised this issue. It is critical to stop the attack on the bolivar in order to control inflation, the loss of purchasing power, and reactivate the economy.

Recovering oil production, which has fallen by almost half between 2012 and 2018, is also strategic because it explains 34% of the reduction in our cake. We suggest asking the Iranian brothers and sisters how they have resolved that issue after 40 years of being blockaded by imperialism, or the oil-producing Russians who are also blockaded, and even the Cubans though they have no oil.

The main thing is not only that the cake in Venezuela is smaller, the pieces to be distributed are smaller and therefore the income is lower, but also and as if that were not enough, that cake that historically has been very unevenly distributed is being distributed even more unevenly since 2012, the year in which the unconventional war began to escalate. Half of the cake is eaten by the bourgeoisie through profit (the exploitation of labor has increased 247% between 2012-2017), while the wage-earners, being many more, only get less than a quarter (18%) of the pieces that are also reduced. The tax burden of the capitalists is lower than it already was, not even a tenth of the cake goes to the state and what it collects is mainly consumption. The bourgeoisie, taking advantage of hyperinflation, has been taking its pieces from the workers and the state, making it difficult for the latter to carry out policies to protect the people, including raising the wages of public service workers.

Who is bearing the brunt of this economic warfare more now in this new battlefront that is the pandemic? Who is paying the bill?

What we propose is that given that smaller cake, and even if it were big, the bourgeoisie should give back its piece to the working class, which necessarily means raising wages; also that it gives a good slice to the State instead of sending it to tax havens and in that way guarantee that the State has 40% of the cake in order to pay decent salaries in the public administration and have more resources for the protection policies in which the Bolivarian government has worked so hard, including pensions and a better provision of health, education, transport, electricity, water, among others.

Let the bourgeoisie pay the bill. In the meantime, we, the working class, with better salaries and in better conditions, should take care of fulfilling the still pending task assigned to us by Chávez, the construction of socialism in the 21st century.

 

Featured image: Caracas, Photo: Bill Hackwell

(Resumen Latinoamericano in English)

Pasqualina Curcio

Economist (Central University of Venezuela). PhD in Political Science from Simón Bolívar University (Venezuela). Master in Public Policies of the Institute of Advanced Studies in Administration (Venezuela). She is a Full Professor of the Department of Economic and Administrative Sciences of the Simón Bolívar University. She was Deputy Minister of Collective Health Networks.

Pasqualina Curcio

Economist (Central University of Venezuela). PhD in Political Science from Simón Bolívar University (Venezuela). Master in Public Policies of the Institute of Advanced Studies in Administration (Venezuela). She is a Full Professor of the Department of Economic and Administrative Sciences of the Simón Bolívar University. She was Deputy Minister of Collective Health Networks.