MercoPress. South Atlantic News Agency

Wealth tax returns twice as much as expected in Bolivia

The new tax is part of the “dismantling of neoliberalism,” Arce believes.

Bolivian President Luis Arce announced on Tuesday his country's tax bureau had collected twice as much as originally estimated through the “very rich tax.”

In his Twitter account, Arce explained that days before the deadline, collection exceeded 224.1 million bolivianos (more than 32 million dollars) from 203 millionaires, residents in Bolivia or abroad, with assets over 30 million bolivianos (almost 4.3 million dollars).

Arce underscored the new tax is part of the “dismantling of neoliberalism to resume the Productive Community Social-Economic Model to get out of the crisis,” as the income generated will contribute to the redistribution of resources.

This tax is similar to one already enacted in Argentina and which has also been encouraged by UN Secretary-General Antonio Guterres a fortnight ago.

It is also called “solidarity tax,” because, as Guterres pointed out, it is designed to reduce inequalities in the ability to fight the coronavirus and access vaccines. “I urge governments to consider applying a solidarity or wealth tax to those who benefited during the pandemic, to reduce extreme inequalities,” Guterres had said.

The United States is also eyeing such a measure. With a fiscal deficit forecast at 15% of GDP by the end of 2021, the administration of President Joseph Biden is reportedly considering similar taxation to cover current deficits plus other costs of the pandemic.

According to the inform entitled “Wealth and wealth taxation in Latin America and the Caribbean,” 41% of wealth is in the hands of 1% of the population; 3.8% of tax collection is the total contribution of the rich and 48,000 million US dollars was the increase in the fortunes of Latin American billionaires from March to July 2020.

The same report in charge of Latin American Network for Economic and Social Justice details that in Latin America and the Caribbean, it is estimated that since the beginning of the pandemic, we have gone back 15 years in the fight against poverty, reaching an average of 37 people out of every 100. By the end of 2020, 45 million people, who were not poor before the pandemic, will be poor. It is estimated that 2.7 million formal businesses have closed and the regional GDP will fall by -9.1% at the end of this year.