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Cablegate: Venezuela: Tax Authority Surpasses 2008 Revenue

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PP RUEHAO RUEHCD RUEHGA RUEHGD RUEHGR RUEHHA RUEHHO RUEHMC RUEHMT
RUEHNG RUEHNL RUEHQU RUEHRD RUEHRG RUEHRS RUEHTM RUEHVC
DE RUEHCV #1669/01 3401842
ZNR UUUUU ZZH
P 051842Z DEC 08
FM AMEMBASSY CARACAS
TO RUEHC/SECSTATE WASHDC PRIORITY 2242
INFO RUEHWH/WESTERN HEMISPHERIC AFFAIRS DIPL POSTS
RHEHNSC/NSC WASHDC
RUMIAAA/HQ USSOUTHCOM MIAMI FL
RUCPDOC/DEPT OF COMMERCE
RUEATRS/DEPT OF TREASURY

UNCLAS SECTION 01 OF 02 CARACAS 001669

SIPDIS
SENSITIVE

E.O. 12958: N/A
TAGS: ECON EFIN PREL EINV PGOV VE
SUBJECT: VENEZUELA: TAX AUTHORITY SURPASSES 2008 REVENUE
GOAL; LOOKS FORWARD TO 2009

REF: CARACAS 01463

1. (U) Summary. The tax authority of the Bolivarian Republic
of Venezuela (BRV) announced December 2 it had already
reached its tax revenue goal for budget year 2008. Tax
officials predict record tax revenues for budget year 2009
and continue to find creative methods to increase compliance
with the tax code, including the inauguration of "street
operatives."

----------------------
A DRUM ROLL PLEASE....
----------------------

2. (U) On December 2, Jose David Cabello Rondon, the
Superintendent of the National Tax and Customs Authority
(SENIAT) announced that between January and November of 2008,
SENIAT had collected 60.83 billion BsF (approximately 28.3
billion USD at the official exchange rate of 2.15 BsF to 1
USD.) This total surpassed 2008's budgeted tax revenue by
.03 percent and includes revenues received from income and
corporation tax, customs tax, the value added tax and other
taxes, such as those on alcohol and cigarettes. The 2008
revenue to date represents a 21 percent increase in tax
collection over the 50.2 billion BsF (approximately 23.35
billion USD) collected by SENIAT in January to November 2007.

---------------------------------
SENIAT'S DISCUSSION OF 2009 GOALS
---------------------------------

3. (U) On November 24, SENIAT issued a press release that
detailed the 2009 tax revenue goals set forth in the 2009
budget. (Note: The 2009 budget is currently pending
approval before the Venezuelan National Assembly.) The tax
collection target for 2009 is set at 76.8 billion BsF
(approximately 35.72 billion USD.) SENIAT stated that the
2009 tax revenue target is 14 billion BsF greater than 2008
tax revenues. (Note: This claim is not supported by the
data available to SENIAT at the time of publication. If the
growth in 2009 tax revenue mirrors the rate of growth from
2008, Post estimates SENIAT tax revenue will be closer to
80.76 billion BsF (approximately 37.56 billion USD.) End
Note.) However, SENIAT did mention the possibility of a tax
revenue shortfall. In its press release, SENIAT squarely
placed the blame for any shortfall on "the consequences of
the financial crises generated by the United States and the
effect on the global economy."

---------------------------------------
TAX OPERATIVES TAKIN' IT TO THE STREETS
---------------------------------------

4. (SBU) As reported in reftel, SENIAT had already launched
well publicized and aggressive tax enforcement actions
against a number of high profile taxpayers this fall. A
VenAmCham committee member yesterday reported that SENIAT has
recently sought to fine several firms for not paying their
taxes on time. When presented with evidence that the taxes
had been paid on a timely basis, SENIAT has backed down but
asked that firms pay 10 days in advance next time.

5. (U) A new wrinkle in the increased enforcement of the
tax code is the recent development and deployment of
"operativos de calle" ("street operatives"). These street
operatives urge businesses to declare their receipts for
income tax collection purposes and to pay the appropriate
value added tax on their sales. According to news reports,
the street operatives are working the main street in the
Andean zone of the country and are visiting small businesses
such as clothing, electronics, and jewelry stores as well as
butchers, bakeries and beauty salons, all businesses which
see an up-tick in holiday sales. The new enforcement
strategy could add to the increase in tax revenue already
realized in 2008.

-------
COMMENT
-------

5. (U) The BRV has used its windfall oil revenue to fund
off-budget spending, often focused on shoring up Chavez'
political base through massive social spending. The recent
collapse in oil prices will force the BRV, in the new year,
to search for revenue to avoid dipping into its array of
rainy day funds. We assess that SENIAT collections through
the end of 2008 could provide the BRV with as much as 6

CARACAS 00001669 002 OF 002


billion BsF in unbudgeted funds. SENIAT will push to
increase tax collection in 2009 as well. These funds could
be used by the BRV to soften the economic blow of decreased
oil revenue, allowing it to continue spending on the massive
social programs.
GENNATIEMPO

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