Bolivia - Politics, government, and taxation

Bolivia gained independence from Spain in 1825. It has had 61 presidents, 1 of them a woman, Lydia Gueiler Tejada (1979-80). Some held the office more than once, consequently making 79 governments. The shortest were a few days long, the longest 10 years. Only 37 presidents came to power by legal means; the others gained the presidency by revolution. Most of the revolutions were simple bloodless palace revolutions (coups d'etat). A few presidents who achieved power by revolution were later elected legally, including President Hugo Banzer, who was elected in 1997 for a 5-year term. He had been a military dictator from 1971 to 1978. Bolivia has had 18 constitutions; the last one from 1967 was extensively amended in 1994.

The significant revolution of 1952 which introduced great economic, political, and social reforms was engineered by the Movement of the National Revolution (MNR) Party. The MNR is still one of the dominant parties although it has splintered. One splinter is the Movement of the Revolutionary Left (MIR), which is far more moderate than its name implies. It held the presidency between 1989 and 1993, and then the MNR returned to power. In 1997, ex-dictator Hugo Banzer won the presidency as a candidate of the Democratic National Action (ADN) Party, which is considered right of center, forming a coalition with the left of center MIR and several smaller parties. In the forthcoming election of 2002 the MNR, MIR, and ADN are expected to present candidates, as will some other parties which have little hope of winning. These others can be defined as 6 leftist parties, 3 populist parties, 1 evangelical party, and 3 indigenous parties. The indigenous parties have been quite visible with colorful public demonstrations and displays but have little broad support.

Candidate, leader of the MNR party, and president (1993-97), Gonzalo Sánchez de Lozada was educated and lived in the United States. The MNR shifted its leftist and nationalist tendencies to a more centrist position that was devoted to privatization and globalism (gener-ally identified as neo-liberalism). This charge produced lively debates and intense political activities which have continued into the Banzer presidency. Banzer's coalition government has only fine-tuned the policies of his predecessor, with much emphasis on the eradication of illegal ("in excess") coca plants and the substitution of other crops that are useful for export. Former president Sánchez de Lozada is a leading candidate for the presidency in 2002. Another leading candidate is the MIR leader Jaime Paz Zamora who was president from 1989 to 1993.

The main source of government revenue is taxation. According to the IMF Bolivia report of 2000, the total revenues of Bolivia in 1998 represented 24.8 percent of its GDP, with tax revenues at 19.5 percent of the GDP. In 1998, indirect taxes constituted 47.4 percent of tax revenues, including the value-added tax (VAT) with 29 percent, excise taxes with 6.7 percent, and transaction taxes with 8.4 percent. Transaction taxes are often known as stamp taxes. Taxes from hydrocarbons provided 23.8 percent of total taxes, mining royalties only 0.04 percent, and customs duties 7 percent. Personal income and property taxes constituted 6.9 percent, and corporate income and property taxes were 0.1 percent.

Personal income tax is a flat 13 percent, but for everyone there is a basic deduction of 2 minimum salaries. (As of January 1998 the minimum salary was Bs300 per month.) The VAT tax paid for personal consumption is deductible from the income tax with proper receipts. There is a social security system which was reformed and partially privatized in 1997. Employees must contribute 12.5 percent of their salaries with a ceiling of 60 minimum salaries (computed as US$415 a month). There are no local income taxes and no joint filing for husband and wife.