Venezuela’s Constituent Assembly Approves New Tax Law

The legislation will allow the president to fix a “punitive” tax unit that can be used to fine businesses when they break the law.


Bogota, December 22 2017 ( – Venezuela’s National Constituent Assembly approved the Law for Punitive Tax Units Wednesday, in a bid to bring national businesses to heel.

The legislation will be used to fine companies or stores when they break the law – and presumably when they flout government price-controls on certain products. The law is one of the eight pieces of legislation proposed to the ANC by Venezuelan President Nicolas Maduro last September to combat the country’s acute economic crisis.

According to ANC delegate Eduardo Pinate, the law will “keep combating the impunity of businesspeople and shop-owners, facilitated by ridiculous fines and sanctions”.

In Venezuela, the value of tax-units are set annually by the government and used as a basis to calculate the cost of state-services and tax contributions for both citizens and businesses alike. For instance, the cost of ordering a passport is equivalent to so-many tax units.

Though the exact value of the new punitive tax unit will be determined by the president in early February next year, ANC spokespeople said the amount would be based on the most up-to-date consumer price index in Caracas, as opposed to on the country’s formal economy like normal tax units.

The existence of a de-facto two-tiered economy, in which business set their prices according to the speculative black market dollar, means that current fines based on annually agreed tax unit values are tiny in comparison to commercial profit. As it stands, financial sanctions on businesses very rarely act as deterrent to breaking the law.

Elimination of Two Metropolitan Mayoral Offices

Meanwhile, the ANC also voted Wednesday to eliminate Metropolitan Mayoral offices in the Alto Apure District and the Metropolitan District of Caracas – both made up of several smaller municipalities.

ANC President, Delcy Rodriguez, said that the two offices – which were created through Venezuela’s 1999 Bolivarian Constitution – were no longer “fit for purpose”.

Between 2000-2008, the Metropolitan Mayor of Caracas’ office was held by pro-Chavista politicians, before being taken-over by right-wing opposition veteran Antonio Ledezma. Ledezma served as Metro Mayor until 2015, when he was arrested on charges of abetting terrorism and conspiring against the government.

Earlier in November this year, the former-Metro Mayor made international news headlines when he escaped house arrest and fled to Spain. The mayoral position has been held by a series of opposition “acting-mayors” since Ledezma’s initial arrest – with opposition politicians from different parties vying for the post.

In Apure, the Metro Mayorship has traditionally been held by Jorge Rodríguez Galvis since its creation in 2004. Rodriguez has been elected on three separate occasions to the post on different Chavista tickets, including under former President Hugo Chavez’s original MVR party (Fifth Republic Movement), the United Socialist Party of Venezuela, and finally under the VBR party (Bicentenary Republican Vanguard).

Rodriguez is the father of former Chavista Justice Minister, Miguel Rodriguez Torres, who broke with the government in 2015 to offer a “third way” between Chavismo and the opposition.

Venezuela’s opposition has accused the government of trying to cement its political power through the elimination of the two offices, with acting Metro Mayor of Caracas for the opposition Justice First party, Alí Mansour Landaeta, slamming the move as a coup. Landaeta took over the post in November following Ledezma’s escape and had not been elected to the office.

Validation of Political Parties

The opposition has also decried a decision taken by the ANC to require political parties that boycotted the previous elections to re-register with the National Electoral Council prior to participating in new elections.

“If they refuse to participate in an election, they must validate themselves again, in line with what is established in the Law of Political Parties,” said ANC President Delcy Rodriguez.

Rodriguez said the move was aimed at promoting political participation, and that electoral boycotts were an attack on Venezuela’s democratic system that would not be tolerated.

The 1965 Law of Political Parties states that parties which do not manage to win 1 percent of the vote in previous elections must re-register with electoral authorities. To remain legal, parties will have to prove that they have a membership base equal to at least 0.5 percent of registered voters across 12 states of their choice.

Nearly all opposition parties and some smaller Chavista parties had to complete this process in April 2017 and were able to meet the qualifying threshold.

The ANC’s decree on the validation of political parties comes after the opposition coalition’s three largest parties took the decision to boycott municipal elections on December 10, following a huge defeat in regional elections in October at the hands of the ruling socialist party.

Following the December 10 elections, President Maduro stated that certain parties may have invalidated themselves from political participation through the boycott – though he said that the ANC would make the final decision.

The international media immediately reported that opposition parties had been banned in Venezuela.