Venezuela’s Maduro announces tax reform, more oversight as he struggles to fix economy

Tax reform, company audits and a review of ministries were some of the measures President Nicolás Maduro announced Tuesday as his administration struggles to correct a flailing economy.

07/15/2014 7:25 PM

07/15/2014 7:25 PM

Venezuela might be bracing for tax hikes after President Nicolás Maduro said Tuesday he was preparing a “fiscal revolution” that was needed to continue financing the country’s social programs and subsidies.

During a televised speech, Maduro didn’t offer details about the plan but said it would be unveiled in coming weeks.

The beleaguered administration had said that major economic announcements were going to be made during the broadcast, fueling speculation that another currency devaluation might be in the works, but the hours-long speech provided few bombshells.

Along with the tax reform, Maduro said he planned to review the functioning of each ministry to “detect the true truth” — suggesting a shakeup might be in the works.

He also ordered an extensive audit of every company that received dollars at preferential rates during the first semester. He said more than 3,000 companies have already been barred from the program and are under investigation for abusing the system.

Venezuela imports about 70 percent of all of its goods but strictly controls access to foreign currency — exacerbating shortages of crucial items and feeding speculation.

On Tuesday, local media reported that the Hematology and Oncology Institute of Venezuela’s Central University was shutting down due to the lack of vital medicine and other supplies.

The currency controls, and a thriving parallel market for dollars, have also saddled the country with the region’s highest inflation, which is running at 61 percent per year.

Maduro acknowledged the problem Tuesday but blamed it on “macabre and perverse capitalism.” He also said that 40 percent of all Venezuelan goods are illegally smuggled into neighboring Colombia where they are sold at steep profits.

Maduro planned to travel late Tuesday to Brazil to join the ongoing meeting of the BRIC nations — Brazil, Russia, India and China. While there, he said he plans to meet with Colombian President Juan Manuel Santos to discuss the contraband problem.

Venezuela spends billions on free housing, education and providing the world’s cheapest gasoline. And analyst say the administration will be under pressure to ramp up spending as the 2015 legislative election looms.

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