Liquor rush is on in Venezuela ahead of tax increase on luxury goods

Global Business

Venezuelans are swarming liquor stores after a soon-to-be 15 percent hike on luxury goods was announced on liquor, but not beer. CCTV America’s Martin Markovits reported this story from Caracas, Venezuela.

The country is upping its tax on luxury goods from 10-15 percent, affecting the market for yachts, planes, and fancy cars but also those who indulge in alcohol.

Luiz Munoz waited in line for more than half an hour for whiskey. He is opposed to the tax hike, and doubts the money will trickle down to the people who need it.

“It is not justified. Yes in every country they charge for alcohol. But even if they charge taxes on food, alcohol or any item, the money does not get distributed to the people. Go to a hospital and you will realize that the hospitals don’t have medicine; there are no supplies, so where will these taxes go,” Munoz said.

Beyond tobacco and alcohol, the government is raising taxes on all luxury goods worth more than $30,000. The measure was one of 28 new laws decreed to bolster the country’s economy. Venezuela is a member of the Organization of the Petroleum Exporting Countries and is strapped for cash as oil prices have dropped to a four-year low.

Many free market economists said the problem is Venezuela’s steep price and currency controls that have created a shortage of dollars that have made it harder to import goods.

Along with these new laws, Venezuelan President Nicolás Maduro ordered that a $4 billion loan from China be included in the foreign reserves. This will bring much needed revenue to the country’s foreign reserves which have reached an 11-year low.

Liquor rush is on in Venezuela ahead of tax increase on luxury goods

Venezuelans are swarming liquor stores after a soon-to-be 15 percent hike on luxury goods was announced on liquor, but not beer. CCTV America's Martin Markovits reported this story from Caracas, Venezuela.

CCTV America interviewed Eric Farnsworth of vice president at the Council of the Americas about the current changes in the Venezuelan economy.

Eric Farnsworth of Council of the Americas discusses Venezuelan economy

CCTV America interviewed Eric Farnsworth of vice president at the Council of the Americas about the current changes in the Venezuelan economy.