February 20, 2006

Paying Taxes in Bolivia

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Here is a little graph from La Razón showing everything one wants to see when talking about reforms in the tax code and collection. It's showing that the collection of taxes (value added or as we know them, sales taxes) has increased from 2001 to 2004. While the tax evation problem has decreased markedly.

The one idea I like though is that of recognizing (by the authorities) informality as a problem and developing the willingness to fix it. One proposal is to formalize the informal and incorporate all those merchants into the tax paying ones.

I should be expecting more glowing financial and economic reports coming out of Bolivia. Since so much debt was forgiven (Spain, the IMF and now Japan) and there is actually an increase in the in-take of tax contributions. If things go this way, I suspect somewhere in the future lies some form of income tax.