Tax Revenues Sharing and the Bolivian Census 2012: Lessons from Alice in Wonderland

Tax Revenues Sharing and the Bolivian Census 2012: Lessons from Alice in Wonderland

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One of the advantages of having devoted my time to the hydrocarbons sector is my learning of the Bolivian economy. What? Thanks to this sector I could meet many realities: 1) the status of the elderly, thanks to Bonosol / Bolivida / Renta Dignidad, 2) Regional government fiscal situation through the sharing of the Direct Tax on Hydrocarbons, 3 ) the precarious state of the Governors, through collection by IEHD, 4) I know now that half of the Bolivian recent economic growth was because the gas export project to Brazil (conceived between 1974 – 1999). For all these reasons I feel lucky, really my knowledge of the Bolivian economy is greatly aided by the «stuff» I know from my country’s hydrocarbon sector.

For «not Bolivian» friends maybe you will find this post boring because is a local discussion, so almost mandatory I invite you to spend your time in a better way… for example, with your loved ones. To my Bolivian friends tell you that the current discussion of the Census 2012 results caught my attention, especially the tasty discussion between the number of persons in La Paz and Santa Cruz. In summary, the results of January 2013 and July 2013 differ in this way: Santa Cruz has fewer inhabitants than previously thought and La Paz more than previously thought. Naturally Bolivian social networks didn’t stop arguing about it.

For this reason I want to share with you a couple of estimates that struck me. As I mentioned at the beginning, thanks to the hydrocarbon sector I have access (or build) to interesting information, for example, the municipal tax sharing. Again what? That thanks to the evil neoliberal era in Bolivia, part of tax revenues are distributed according to the population… plain and simple criteria, the more people have a municipality … more money they have. What perhaps is not discussed much in social networks is the relative concept of «most people», so far the results of Census 2012 are evaluated in absolute terms rather than relative. Let me explain … like the rabbit in Alice in Wonderland, the speed of a race is measured by the speed of the opponents. In this sense, from a point of view from taxation, does not matter much if a department has fewer people in absolute terms, the important thing should be, having fewer inhabitants relatively. To continue the example of Alice in Wonderland: you can run «fast» at 20 miles per hour if the other competitors is 10 miles per hour… even when 20 miles per hour in absolute terms seems very slow.

With these ideas in mind I invite you to see the graph below, you¡ll find the tax sharing with 2001 Census and the new results… curiously La Paz gets less and Santa Cruz receives more! What wonderful? I must be honest, this result was completely unexpected for me, I (like many) thought that La Paz would be better, but in relative terms it’s worse.

The numbers are something fantastic that’s why and so I wanted to share these results with you, hopefully contributing to the current discussion. In these moments I’m very happy, after 10 hours of work (which is the time spent in this post) I can show a result that perhaps takes your attention. Regarding the «home news» my son (Santi) was with a cold, so the other day his dad made tea with lemon… Santi’s comment was: «Oh, rich … but a little hot», failure of a dad trying to do the best he can, but not always in a successful way. I conclude by reiterating my happiness of being in my beloved country again commenting current local issues.

A big hug and excellent start of August.

Mauricio Medinaceli Monrroy

La Paz, 1st. August 2013