By Natalí Risso on December 29, 2020
Photo: Colombia Informa
“For the redistribution of the wealth in Bolivia, we are proposing the Law of Tax on Large Fortunes, which will apply to those who have wealth greater than that of 30 million Bolivians. Only 152 people will be subject to this tax. The benefits will reach thousands of Bolivian families.” Luis Arce, the president of Bolivia, announced this measure which was approved last week by vote of Congress. The tax will be annual and permanently in effect for residents in Bolivia, including foreign residents, who have shares, bank deposits, and assets worth more than 4.3 million dollars, within Bolivia or outside the country, on December 31 2020.
The legislation establishes a variable tax, with percentages lower than those applied in the one-time contribution that millionaires in Argentina will be assessed (between 2 and 3.5%, depending on the amount of wealth.) The government of Bolivia will charge 1.4% for persons with assets between 4.3 and 5.7 million dollars, 1.9% for those with fortunes between 5.7 million and 7.2 million dollars, and 2.4% for those with fortunes larger than 7.2 million dollars. This appears to constitute a progressive system of taxation in which “those who have most, contribute most, and those who have less contribute less,” Arce explained.
One of the points put forward by the millionaires who will be taxed and agreed to by the Bolivian Executive Branch of government is that this be confidential. The Ministry of the Economy of Bolivia calculated that this will raise about 110 million in Bolivian currency – more than 14.5 million dollars.
In the same session, Arce also enacted the Law of the General Government Budget for 2021, which projects economic growth of 4.8%, and the Schedule of Cash Reimbursement of Value Added Tax, a law that decrees the return of 5% of the Value Added Tax to all those who receive a monthly salary less than $1,293. In the signing ceremony, he pointed out that the three laws have the goal of “consolidating our economic, social, community-based, and production model, on the one hand and also of contributing to the dismantling of the neoliberal model imposed for 11 months in our country.”
The bill promoted by the brand-new president forms part of his most urgent campaign promises: to deliver government assistance to more than a third of the population (the Bonus Against Hunger), put in place a tax on large fortunes, and begin the investigation and legal sanctions against suspected crimes of repression committed by the interim Jeanine Añez government.
In this way, Bolivia becomes the second country in Latin America, following Argentina, to approve such a contribution. Among the extraordinary bill proposals under discussion, the most notable are those of Brazil, Peru, Chile, and Ecuador. In Brazil there are four proposals before the Senate; one of those proposed by the opposition party stipulates a 2.5% tax rate on fortunes larger than 50 million reales ( just under $1 million).. In Peru, one of the parties with representation in Congress proposed that persons and corporate entities (legal persons) that earn more than one million soles (about $275,000) per year should pay a 1% tax, which would rise to 3% if income is greater than 50 million. In Chile, Representative Camila Vallejo will present in Congress a proposal drawn up by the Communist Party. It consists of a wealth tax directed toward the richest 1% of the country, with an annual 2% rate that will be charged until the distribution of wealth reaches 0.25% as measured by the Gini index*, given that the current estimate is that 1% of the population has 30% of all the wealth. In Ecuador, those aligned with Rafael Correa are pushing a similar initiative, although, in that country, only one person has legislative standing to determine tax questions, and that is the president, currently Lenin Moreno.
On the other side of the Atlantic, there are also a large number of bills proposed in many different countries, and at least three that levy a tax. Germany charges a Solidarity Tax with a super-tax or surcharge of 5.5% on the largest accumulations of wealth, Spain, with a Wealth Tax, and France with “exceptional tax measures” with rates between 3 and 4% for fortunes greater than 250,000 Euros.
*a measure of the distribution of income across a population developed by the Italian statistician Corrado Gini in 1912. It is often used as a gauge of economic inequality, measuring income distribution or, less commonly, wealth distribution among a population.
Source: Pagina 12, translation Resumen Latinoamericano, North America bureau