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Chapter 2

Tax and Monetary System

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Table of contents

Section One. Budget System

Article 311

Fiscal Policy shall be governed and implemented on principles of efficiency, solvency, transparency, responsibility and fiscal balance. Fiscal Policy is to be balanced over a multiyear budget framework, in such manner that ordinary revenues shall be sufficient to cover ordinary expenses.

The National Executive shall submit for enactment by the National Assembly a multiyear framework for budgeting that establishes the maximum limits of expenditures and indebtedness to be contemplated in national budgets. The characteristics of this framework, the requirements for modifying the same and the terms for carrying out the same shall be established by law.

Any revenues generated by exploiting underground wealth and minerals, in general, shall be used to finance real productive investment, education and health.

The principles and provisions established for national economic and financial management shall also govern that of the States and Municipalities, to the extent applicable.

Article 312

Public debt limits shall be set by law in accordance with a prudent level in terms of the size of the economy, reproductive investment and the ability to generate revenues to cover public debt service. In order to be valid, public credit transactions shall require a special law authorizing them, with the exceptions established under the pertinent organic law. The special law shall indicate the modalities of the transactions and authorize the appropriate budget credits in the pertinent budget law. The annual special indebtedness law shall be submitted to the National Assembly together with the budget law.

The State shall not recognize any obligations other than those assumed by lawful National Authority organs in accordance with law.

Article 313

The economic and financial management of the State shall be governed by a budget approved annually by law. The National Executive shall submit the draft Budget Act to the National Assembly, at the time prescribed by the organic act.

If the Executive Power fails for any reason to submit the budget bill within the time limit established by law, or the bill is rejected, the budget for the current fiscal year shall remain in effect.

The National Assembly shall have the power to alter budget items, but shall not authorize measures leading to a decrease in public revenues or to expenses exceeding the estimated revenue amounts in the budget bill.

In submitting the multiyear budget framework, the special indebtedness law and the annual budget, the National Executive Branch shall explicitly state the long term objectives of fiscal Policy and explain how these objectives are to be achieved, in accordance with principles of responsibility and a fiscal balance.

Article 314

No expense of any kind shall be disbursed unless the same has been provided for in the budget law. Additional budget credit items may be ordered to cover essential unforeseen expenses or items that had not been adequately funded, only if the treasury has resources to cover the expenditure concerned; this shall be done only following a vote in favor by the Cabinet of Ministers and authorization by the National Assembly, or in its absence, by the Delegated Committee.

Article 315

In the annual public expense budgets at all levels of government, the specific objective to which each credit item in the budget is addressed shall be clearly established, as well as the concrete results expected and the public officials responsible for achieving these results.

The latter shall be established in quantitative terms, by means of performance indicators, where this is technically possible. The Executive Power shall submit to the National Assembly within six months of the close of the fiscal year the annual accounting and budget implementation balance sheet for such fiscal year.

Section Two. Taxation System

Article 316

The taxation system shall seek a fair distribution of public burdens in accordance with the taxpayer’s ability to pay, taking into account the principle of progressive taxation, as well as protection of the national economy and raising the standard of living of the population, the foundation therefore being an efficient system for the collection of taxes.

Article 317

No tax, assessment or contribution of any kind shall be collected unless it is established by law, and no exemptions, abatements or other types of tax incentives shall be granted except as provided for by law.

No tax shall have a confiscatory effect.

No tax obligations payable in personal services shall be established. Tax evasion may be punished as a criminal offense, without prejudice to other penalties established by law.

In case of officials they shall be punished double.

Every tax law shall specify the interval that is to lapse before it goes into effect. In the absence of such provision, the period shall be understood as being 60 calendar days.

This provision shall not restrict the extraordinary powers to be granted by the National Executive in the cases provided for by this Constitution. The national tax administration shall enjoy technical, operating and financial autonomy in accordance with legislation approved by the National Assembly, and its maximum authority shall be designated by the President of the Republic, in accordance with the rules laid down in the pertinent law.

Section 3. National Monetary System

Article 318

The monetary competence of National Authority shall necessarily be exercised exclusively by the Venezuelan Central Bank. The fundamental objective of the Venezuelan Central Bank is to achieve price stability and preserve the internal and foreign exchange value of the monetary unit. The monetary unit of the Bolivarian Republic of Venezuela is the Bolivar.

In the event a common currency is instituted within the framework of Latin American and Caribbean integration, it shall be permissible to adopt the currency provided for by a treaty signed by the Republic.

The Venezuelan Central Bank is a public-law juridical person with autonomy to formulate and implement policies within its sphere of competence. The Venezuelan Central Bank shall perform its functions in coordination with general economic policy, in the interest of attaining the higher objectives of the State and the Nation.

In order to provide for the adequate attainment of its objective, the functions of the Venezuelan Central Bank shall include those of formulating and implementing monetary policy, participating in the design of and implementing foreign exchange policy, currency regulation, credit and interest rate, administrating international reserves and any others established by law.

Article 319

The Venezuelan Central Bank shall be governed by the principle of public responsibility, to which end it shall render an accounting of its actions, goals and the results of its policies to the National Assembly, in accordance with law.

It shall also issue periodic reports on the behavior of the country’s macroeconomic variables and on any other matters concerning which reports may be requested, including sufficient analysis to permit its evaluation.

Failure to meet the objective and goals, without justifiable cause shall result in removal of the Board of Directors and imposition of administrative penalties, in accordance with law.

The Venezuelan Central Bank shall be subject to oversight after the fact by the Office of the General Comptroller of the Republic and inspection and supervision by the public entity that supervises banking, which shall send to the National Assembly reports on the inspections it conducts.

The budget of operating expenses of the Venezuelan Central Bank shall require discussion and approval by the National Assembly, and its accounts and balance sheets shall be subjected to independent audits on such terms as may be established by law.

Section 4: Macroeconomic Coordination

Article 320

The State shall promote and defend economic stability, prevent the vulnerability of the economy and see to monetary and price stability, in order to ensure the welfare of society.

The ministry responsible for finance and the Venezuelan Central Bank shall contribute to the harmony between fiscal and monetary policy, thereby facilitating the attainment of macroeconomic objectives. In performing its functions, the Central Bank of Venezuela shall not be subject to directives from the National Executive and shall not be permitted to endorse or finance deficit fiscal policies.

The coordinated actions of the National Executive and the Venezuelan Central Bank shall be achieved through an annual policy agreement which shall establish the final growth objectives and their repercussion on society, the external balance of payments and inflation, as regards fiscal, foreign exchange and monetary policy; as well as the levels of intermediate and instrumental variables required in order to achieve the aforementioned final objectives.

This agreement shall be signed by the President of the Venezuelan Central Bank and the head of the ministry responsible for finance, and shall be made public at the time of approval of the budget by the National Assembly.

It is the responsibility of the signers of the agreement to see that policy actions are consistent with the objectives. The aforementioned agreement shall specify the results expected and the policies and actions designed to achieve the same.

The characteristics of the annual economic policy agreement and the mechanisms for submitting an accounting shall be established by law.

Article 321

A macroeconomic stabilization fund shall be established by law for the purpose of guaranteeing the stability of the State’s expenses at the national, regional and municipal levels, in the face of fluctuations in ordinary revenues.

The operating rules for this fund shall observe the basic principles of efficiency, fairness and nondiscrimination as between the public organs contributing resources to the fund.

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