Rich Targeted by New Venezuela Taxes

By ELIZABETH M. NUNEZ Associated Press Writer
© 2007 The Associated Press
http://www.chron.com/disp/story.mpl/ap/fn/4487106.html

CARACAS, Venezuela — President Hugo Chavez announced plans to slap taxes on luxury property including second homes, expensive cars and art collections on Sunday, targeting the rich to help fund his drive to remake Venezuela as a socialist society.

Chavez said proceeds of the new taxes, which have yet to be fully spelled out, would redistribute wealth by funding newly created communal councils at the neighborhood level.

Speaking to the nation on his weekly program "Hello President," Chavez said Venezuela needs a new tax "on large capital, large earnings," and told his finance minister: "I want new enabling laws on this... a tax on lavish property."

He outlined the plan in general terms and did not say how much the tax would be.

Addressing the wealthy, Chavez said: "Oh, you have a yacht? Perfect, give to me, buddy. You have a BMW? Well, that's fine. You go around Caracas in a tremendous car. You have a house where you live and another one by sea... You have some marvelous art collections _ come here, buddy."

"Everything that is collected ... goes to the communal councils," he said.

Chavez's government is increasing funding to thousands of communal councils across the country. The councils, made up of members chosen in neighborhood assemblies, decide on spending state money for everything from fixing potholes to building new sewers.

The new taxes are among dozens of laws Chavez plans to pass by decree once the entirely pro-Chavez National Assembly grants him broad lawmaking powers through an overarching "enabling law," which is expected to be approved in the coming week.

Chavez, who was re-elected for a third term last month, says he will use his six-year term to transform his oil-producing country into a socialist state. Critics say his real aim is to consolidate power.

Chavez enjoys his strongest support base among the poor and has famously declared that "being rich is bad."

But he also announced a broad-based measure to raise gasoline prices for the first time in years _ a move that would affect drivers regardless of income but would not apply to public transport or trucks distributing goods such as food.

Venezuelans have long enjoyed some of the cheapest gasoline on the planet thanks to heavy state subsidies. Gasoline costs as little as US$0.12 a gallon ($0.03/euro0.03 a liter) here, and low prices are considered a birthright.

Chavez said a price hike is long overdue, though he did not say how much it would be.

"In eight years, we haven't touched the price of gasoline and in reality it's outrageous to sell gasoline at the rate we are. It would be better to give it away," he said.

Chavez instructed his oil minister, Rafael Ramirez, to make sure the price hike does not "affect the transport of food, school transport, none of that. It doesn't have to affect the cost of anything."

With current cheap prices, he said, "the middle class and high class are the ones who benefit the most because a poor person will get on a bus or the subway."

He said higher prices will be paid by the driver "who goes to fill up the BMW or who has a huge sport-utility vehicle."