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.


eduardo said...

They are beginning to enforce the issue of "facturas" and many businesses have been closed temporarily because of their failure to issue receipts. On this most recent trip, I found that it was more common.

For example, the recent issue of used clothing. Many of those who sell used clothing do not even want to issue "facturas" for tax purposes. At least if they were paying taxes, then it wouldn't be so controversial.

Jonathan said...
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Jonathan said...

Nice graph pointing out good developments in matters of accountability and tax collecting. The increase in collected revenues has much to do with the implementation of new technologies in recent years (who's the provider of the hardware I don't know yet).

However, what I don't like about current data flowing out of Servicio de Impuestos Internos.. it's that it doesn't tell you who's paying the taxes (sure you can make inferences, ie. IT or Impuesto a las Transacciones (Financieras) is paid by anyone who moves funds in dollars and is a participant of the banking system, who tend to have some disposable income and participate in the formal economy) but as far as dividing tax reporting in terms of family income or so, there's still a lack of information.

And based on that lack of information it's easy for demagogues and policy makers to make absolutist statements such as "the rich don't pay taxes" or "cruceño businessmen are tax evaders"...

More on policy making: The current government is always talking about small businesses (and that covers everyone from informal merchants to the caseritas in la cancha)and how they are all for giving power to them. But my friends you can't make solid institutions and solid markets without appropiate taxation.

High corporate taxes scaring off transnational business isn't going to solve all of Bolivia's problems... the answers are much closer home

miguel said...

What strikes me most is the fact that the control mechanisms are working and one can see this from the rise in the numbers.

Controls have been in place for a long time, but with corruption they were not effective. What used to happen was that the tax controller used to pocket money from the businesses he or she visted so he would not report them to the tax agency.

Now, they must have implemented some kind of sistem to tighten control of the tax collectors and reduce the incidences of corruption.

I think Jonathan puts his finger on the issue. These new "sistem" they have been working on must be curtailing in some way corruption.

As far as the availability of information. I think that compared to ten years ago, the level of transparency has increased manyfold in Bolivian data. Of course, it is not to the level of other countries, but it has improved.

Now, of you are looking for disagregated data you might give a try the INE, or the Central Bank. I have seen some sets of data that were just too much in the Central Bank's website. Although I have not been to the renta interna's website lately, they might have some data too. Try your luck.

Jonathan said...

Aparently it's called "The Da Vinci System": (not to be confused with the surgicall method)

From La Razón:

El sistema Da Vinci logra subir la recaudación fiscal

A partir de la aplicación del sistema Da Vinci, el Servicio de IMPUESTOS Nacionales ( SIN ) logró subir las recaudaciones por el Régimen Complementario al Impuesto al Valor Agregado ( RC-IVA ) en un 58%. El sistema Da Vinci es un software que el SIN repartió a los principales contribuyentes para que quienes ganen más de Bs 7 mil puedan realizar sus descargos de facturas vía internet. El presidente del SIN, Rafael Vargas, señaló que la aplicación de este sistema permitió mejorar los mecanismos de control. “Desde la aplicación del mecanismo Da Vinci, las recaudaciones por el RC IVA han ascendido en un 58%. Es un aspecto que es importante ya que recién llevamos un par de meses de su implementación”, indicó. Vargas puntualizó que el sistema Da Vinci además permite detectar cualquier anormalidad en el comportamiento de algunos contribuyentes. Por ejemplo, en cuanto a la presentación de facturas falsas o clonadas. En cuanto a la recaudación, dijo que en enero de este año el SIN recaudó Bs 686, 5 millones, es decir Bs 80, 5 millones ( 13, 3% ) más que en enero del 2006. Respecto de la meta ( Bs 684, 7 millones ) , la misma fue superada en 0, 3%.

Anonymous said...

Just wanted to bring your attention to a few documentaries on Bolivia that look promising: The Devil's Miner and Our Brand is Crisis.


Also, the Bolivian-American Chamber of Commerce maintains an email distribution list for Bolivia related events, and occasionally organizes events.


Miguel said...

Thank you very much for the links.