It just must get smaller

Last week, the Minister of Finance declared that “there will be no modification to the sales tax simply to comply with the requests of the business community”. Immediately thereafter, he stated that “when tax evasion is reduced ... we could think of reducing the percentage of the sales tax”. There is no doubt that the official sector has become expert at applying the “divide and conquer” formula.

The desire to reduce sales tax levels is completely normal and common, typical of tax payers world-wide. The reduction of sales tax levels doesn’t only benefit the business community. On the contrary, given the progressive nature of this tax, the salaried workers are normally the ones who benefit most from this reduction. In this context, to divide Venezuelans into businessmen on one side and workers on the other seems out of place.

Another such “division” is between income earners that actually pay their taxes and those that don’t. This would imply that the payment of taxes in Venezuela is simply the result of individual social responsibility and not as in other countries, the result of the existence of an efficient tax collection entity which is perceived as severe but just.

Normally, a State would not even have the right to apply new taxes in the face of such a deplorably poor and inefficient collection process. If it does, instead of complying with its duty as promoter of justice, it is merely promoting just the opposite. Evidently, there is a dose of truth as far as its final implication is concerned, when the Minister declares that there is a possibility that our taxes will be reduced if and when our neighbor pays his. This, however, does not imply that we must become the collector of our neighbor’s taxes. This function is still exclusively in the hands of the States.

This discussion, however, is totally irrelevant in Venezuela. Since the State enjoys unrestricted use of “our” oil income which, by the way, is obtained through the use of a fiscal collection system that is so efficient that we don’t even notice it, it should not collect one more cent. The Venezuelan State is so immense for a country with a population of 20 million, that it is difficult for even the shrewdest of politicians to hide it.

These declarations, which point toward the probable lack of fiscal pressure in Venezuela, were written in the midst of the negotiation and signing of the centralized public administration labor contract framework which will benefit seven hundred and fifty (750,000) workers. For those who worry about the State’s capacity to efficiently manage such a large public sector, an olive branch is offered; the labor contract upholds advancement by merit and awards benefits for individual achievement and for fulfillment of duties as a public servant.

In reality, these comments are simply variations of old and well-known themes. Subjecting this article’s readers to another version of the Venezuelan tragedy is not meant to be an expression of refined sadism, but is unfortunately the result of the identification of new threats that block the development of solid public opinion that would demand, for the benefit of all, a real reduction in the size of the Venezuelan State.

One of these threats comes from international multilateral entities. After much insistence on the necessity of reducing the role of the State in favor of the private sector, the message has now been increasingly oriented towards the need to improve the efficiency of the state. That is to say, there seems to be no need to reduce the size of the State. What it should be, is more efficient. This position, which is obviously logical when applied to the efficiency of a State which has already been reduced in size, will unfortunately simply be an excuse for our pro-bureaucracy politicians to maintain, or even increase, the size of our public sector.

The second threat is endogenous, much more subtle and therefore much more dangerous. The theory that the problems facing the administration of the public sector in Venezuela are based not on its size but on the will, capacity and affection for the country of its leaders has resurfaced as an issue around one particular pre-candidacy for the next presidential elections. This is evidently based in turn on this official’s excellent and admirable administrative achievements at a local level. We are again beginning to feel the first consequences when debates about the qualities of the pre-candidates bring up discussion about the merits of having solid political party administration experience versus the merits of political independence based on administrative capacity and personal integrity.

For someone convinced of the fact that even Bill Gates, reborn as Simón Bolívar (in other words, Mandrake The Magician) could not efficiently manage a country in which the State is as omnipresent as it is in Venezuela in the long run, these new theories are undoubtedly distressing.

Personally, and in order to be able to give unconditional support, I will have to continue my search for a candidate with a less developed ego who recognizes that the future of our beloved country depends more on the dismantling of official bureaucracy than on its great will and capacity for work.

Per Kurowski