The global coalition of oil cursed citizens: The mother of all regressive tax systems

Saturday, March 7, 2009

The mother of all regressive tax systems

Let us suppose that all the net results of the exploitation of any extractive resources that were placed by providence in a country had been equally divided among the citizens, those who arguably are the most legitimate owners of said funds.

Let us then suppose that the central government requests the citizens to give to it all the net results in their possession... what would we have? We would have the mother of all the regressive tax systems, with the marginal tax rate for the poorest being 100%.

Would anyone of you support such a regressive tax system? I don’t think so.

Where I come from

I was named Diversification Manager in the Venezuela Investment Fund that was created in 1974 to handle the oil income surpluses of the nation.

I entered the Fund its very first day, and I left a couple of weeks later, the same day my desk arrived, utterly frustrated when the Fund was requested to analyze, and obviously endorse, in just four days, the economic feasibility studies of a 4 billion dollar investment known as the Fourth Plan of SIDOR, the big Venezuelan iron and steel complex.

With an “if something goes wrong with this project the Venezuelans might have the right to hang us in Plaza Bolívar, and I’m much too young for that” I slammed the door on the public sector … for the following 28 years... except for a short two year stint as an Executive Director in the World Bank.

I have lived through two immense oil revenue bonanzas in my country and I am absolutely convinced that when the oil revenues a government receives exceed 5% of the nations GDP, or 15% of its exports, or 25% of all taxes paid by citizens, the balance of power is so fundamentally affected that bad governance and bad citizenship becomes the major malignant symptoms of the oil-curse.

There is not one single word or idea that I hear today from politicians, or from well-intentioned groups of mostly non-oil-cursed professionals as in EITI or the Resource-Charter, and that I have not heard before with respect to making better use of oil revenues.

The only route to go is keeping the oil revenues from the politicians and giving these directly to the citizens in an orderly fashion.

The global coalition of oil cursed citizens

Saturday, March 7, 2009

The mother of all regressive tax systems

Where I come from

Down with the Oiligarchs!

Down with the Petrocrats!

Kings and beggars

In Venezuela

21st Century Asocialism

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