28 New Laws to Stimulate Production and Disarm Monopolies in Venezuela

Santa Elena de Uairen, Novemeber 19th, 2014. (venezuelanalyis.com)- Yesterday evening, Venezuelan president Nicolas Maduro passed 28 laws by means of the enabling law, which permits executive action without parliamentary approval. The bills, 16 of which were revealed in Tuesday’s promulgation ceremony, make up a comprehensive economic reform directed at industry, agriculture, tourism and tax revenue.

During the live broadcast from the Miraflores presidential palace, President Maduro called the new measures “enabling laws to diversify the economy, to guarantee its growth, and to gain stability in the face of an economic war.”

In recent months, Maduro has gone after buhoneros, or those who buy regulated goods in bulk to re-sell for a profit on the street, and contrabandistas; those who smuggle food and gasoline across land and sea borders. An estimated 40 percent of subsidized goods are removed from Venezuela through the latter method, making it one of the main drivers of scarcity.

However, with these latest statutes, the Venezuelan president is poised to be threaten the stronghold of those elite families and powerful companies who he believes have waged “economic war” on the government, by manipulating the economy to their political and financial gain.

The Anti-Monopoly Law was presented yesterday as a means to “create mechanisms to regulate those positions of power in the market which exercise control over the greater economy.”

Additionally, Venezuela’s upper class will be hardest hit by a series of tax reforms. On top of the pre-existing 12 percent consumer tax (IVA), one law introduces a 15 percent additional tax on “luxury items.”

“This variation of the IVA is not [a measure] against popular consumption,” explained industry minister Jose David Cabello. “Who will be paying those taxes? Those who buy yachts, airplanes, and large properties. Those people who make use of excessive amount of money, if they want to acquire their goods, they can do so by paying an extra 10 to 15%. We will see an increase in revenues, which relies on the growth of the taxable gross domestic product.”

Cabello also elaborated on new measures that increase fines by 200% for tax evaders.

Additional taxes will be added to liquor, and eco-taxes will be introduced for the preservation of ecological tourist destinations, such as the Caribbean nation’s numerous parks and islands.

Aside from those laws directed at increasing revenue, the 28 laws indicate particular attention to agricultural and food production, new regulations in the areas of fishing and mining, increased investment in sustainable tourism, and further regulations meant to the Fair Price Law, introduced in January to protect consumers from speculative prices.

In the past week, President Maduro introduced eight other laws directed at stamping out corruption within public office and providing structure and support for Venezuela’s working class in the face of economic crisis.

Venezuelan Congress granted Maduro yearlong decree powers on November 19th, 2013.

The leader of the Caribbean nation passed a total of 41 enabling laws during the 2013-14 period, 36 of which were promulgated in the past week.

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The following is a list of the 16 new laws and reforms and the corresponding explanations provided by official sources, the remaining 12 laws will be revealed in the next few days.

1. Integral Regionalization for Socio-Productive Development of the Homeland Law, which will establish special economic zones, districts and comprehensive zones for development.
2. Anti-Monopoly Law, which will aid in the creation of mechanisms to regulate positions of power in the market which exercise control over the greater economy, goods, and services.
3. Comprehensive Agro and Food Industry System Law, to consolidate the continuity of all productive processes. This forms the Superintendence of Agro Food Industry Management, which in this case will replace the SADA (National Superintendence of Silos, Storage, and Agricultural Warehouses)
4. Great Mission AgroVenezuela Law, which will permit the improvement of quality in production, incorporating units recuperated from latifundios and establishing an agriculturally productive culture through the promotion of family and school projects.
5. Reform of the Foreign Investment Law, the means to establish mechanisms for foreign investment under the Homeland Plan, as well as the facilitation of public and private investment for the development of priority economic sectors.
6. Reform to the Law which Reserves the State the Right to Exploit Gold and Connected Activities, giving the state the power to authorize the mining of precious minerals, while protecting national interest and respect for the environment.
7. Reform to the Fair Price Law, establishes the means to directly confiscate goods and products obtained with state dollars being sold as contraband. Also creates the Authority of the Defense of Salary Value and Against Speculation.
8. Reform of the Fishing and Agriculture Law, in order to adapt to the system currently needed to meet national demand, optimizing fish production and simplifying requirements.
9. Reform of the Rent Tax Law, eliminating the concept of adjustment for inflation and eliminating methods of tax evasion.
10. Reform of the Consumer Tax Law (IVA), including a 15% additional tax on luxury items.
11. Reform to the Organice Tributary Code Law, increasing fines by 200% and eliminating methods of evasion.
12. Reform of the Tax on Cigarettes and Tobacco Manufacturers Law, requiring immediate payment and eliminating the possibility of delay.
13. Reform of the Liquor and Alcoholic Beverage Tax Law, increasing the consumer tax by 20% to 50%.
14. Reform of the Tourism Law, improving services offered to international tourists, the development of certain touristic zones, monuments and properties. Also installs the eco-tax for the re-investment of funds into environmental projects in the region.
15. Reform of the Credit and Financing of the Tourist Sector Law, for the democratization of funds used for touristic projects and increasing access to loans.
16. Reform of the Fomentation of Sustainable Tourism as a Social and Community Activity Law, which seeks to foment responsibility in communes, communal councils and other social movements toward the development of formative programs to build an ethical code around responsible tourism and service culture.