The Constitutional Situation consists of the transfer of funds from the Central Power to the regional governments, but on this occasion the calculation of this distribution was made without taking into account the oil revenues, which were unconstitutionally considered as “extraordinary revenues” in the Budget of 2023
The Budget Law project for 2023 does not fully comply with the constitutional designs thanks to unusual practices applied at the time of its elaboration, which manipulate the amounts to harm the regions, which will receive less resources than what corresponds according to the Constitution.
This was stated by the economist Leonardo Vera after reviewing the documents obtained exclusively by As it isbecause he stressed in a Twitter thread that the Constitutional Constitution stipulates an allocation of 20% of the amount of the budget as resources for the regions.
The Constitutional Situation is the transfer of resources from the Central Power to the states and municipalities, as stipulated in the Constitution in its article 167.
In this case, the Constitutional Situation was Bs 8,929 million of the Bs 149,823 million stipulated for current income, which represents only 5.5%, a quarter of what should be constitutionally.
According to Vera, the difference in the calculation occurs because the Budget Bill qualifies oil revenues as “extraordinary revenues,” instead of taking them into account as “ordinary revenues.”
“They have classified all income from oil origin as extraordinary. The taxation of the oil sector, the ISLR (Income Tax) and even the royalty have been emptied into a line called extraordinary oil income, something absolutely unusual », he explained.
*Read also: EXCLUSIVE | With the 2023 Budget, they continue to “pichirreando” resources to the regions
The professor of economics at the Central University of Venezuela (UCV) clarified that only those that are not recurring should be considered as extraordinary income, such as those from public credit operations or laws that eventually generate income. This is not the case with royalties, nor with taxes in the hydrocarbons sector.
That is not the case of the royalty, nor of any of the taxes on the hydrocarbons sector. The royalty is an ordinary operating income that has been collected in Venezuela for almost 100 years, and the ISRL since 1942. They do not have an iota of extraordinary ones.
— Leonardo Vera (@LeonardoVera60) December 13, 2022
«Those who sent this crap to the National Assembly know it. Why then have they done it? What is in the background? »She questioned herself.
Due to this distinction, instead of taking the Bs 149,823 million of current income to calculate the Constitutional Situation, 20% was extracted from the Bs 41,464 million of “ordinary income”, which only represents 28% of the total income currents.
“By classifying the royalty and all oil taxes as extraordinary, they excluded 108,358 million bolivars from the calculation,” he stressed.
By classifying the royalty and all oil taxes as extraordinary, they excluded 108,358 million bolivars from the calculation. pic.twitter.com/r8ZiQOmqkT
— Leonardo Vera (@LeonardoVera60) December 13, 2022
This means, in the words of Vera, that 72% of the income from regional governments is being “stolen”, which translates into less ability to carry out their efforts and a greater concentration of power in the Executive Branch.
As a consequence, regional governments will try to seek resources by any means, which could affect the pocket of citizens.
“Faced with the lack of resources to carry out public management, municipal governments launch themselves in search of resources by any means, a practice that is undermining the lives of citizens and business viability in the interior of the country,” he insisted.
Today more than ever we need to reverse that model and give the regions impetus and incentives for development.
It is not taking resources away from local governments how we are going to achieve it. The representatives in the AN today have a great responsibility ahead of them.
Stop that!— Leonardo Vera (@LeonardoVera60) December 13, 2022
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