Generating state revenue

Published in El Pais, 11 December 2021.

With the commitment to achieve different social works, governments have the need to generate State revenue. What could be the sources of income? As with families, there is not much to look for. Income comes from economic activities such as the production and sale of State companies (e.g. refined gas, urea), the join production and sale of companies (private sector) and taxes on different sectors of the economy (State , private, and personal).

Bolivia is no different. In fact, if an analysis is made, the highest income to the government comes from natural resources that, thanks to a change in the law (which was not nationalization), increased resource extraction taxes. However, with the drop in prices, tax income was reduced. In general, the government is looking for new ways to increase its revenue. One way is to increase tax collection by reducing the size of the informal sector. There are many flanks for informality.

1. In Bolivia73% of the economy informal.
2. Many people who do business move a lot of money daily that is not reviewed by taxes.
3. A lot of imports occur illegally, they move millions of dollars without any taxes are paid.
4. Almost the entire transport sector (large or medium) pays a “street or highway use ” tax, but they do not pay taxes on the number of daily passages or tons of cargo that are transported.
5. Many people live in a house taxed as agricultural land (so very little) or they do not even pay taxes because the property is not legally registered. (Uncontrolled urbanization)

Definitely, more than 7 people out of 10 are being in checked by taxes, as they could not explain their earnings because they are not within taxes. But neither can many public officials explain their assets with the sole support of their salaries.

And what about corruption? It takes a large part of the money collected from all these activities and development stalls. Furthermore, it takes lives. We saw it during the COVID-19 period when overpriced respirators were purchased. And this happens more regularly with the investment in infrastructure such as roads or schools that even collapse in less than 10 years. Since this is money that could have been invested in durable structures, and instead of wasting money on repairs, they could go to other infrastructure or better education. How much money is lost? This problem should first be fixed before obtaining taxes from the population that receives a precarious service from the public system.

Corrupt governments blame the wind or rain for the destruction of infrastructure, but it is an excuse for corruption. What would Japan do without buildings or roads? Japan has daily earthquakes and the sea next to it and its airport is on the sea.

It is important to think about the construction of infrastructure, improvement of the health system or the educational system, and it is definitely important to generate income but gradually and showing that the government also has its house in order.