- Venezuela to start using petro cryptocurrency in its tax system
- The country’s crypto will be used to calculate taxes within the country.
- Could this be a navigation point against sanctions for the President Maduro-led government?
The Bolivian Council of Mayors signed the “National Tax Harmonization Agreement” on Aug. 12, paving the way to a new system to optimize taxation in the country. According to reports, the new laws will integrate the country’s sovereign crypto, Petro, as one of the tools in the new system.
According to reports, of the 335 municipal mayors present in the council, 305 mayors (all from the left-wing United Socialist Party of Venezuela (PSUV) led by Maduro) are in favor of switching the tax system to a crypto-based system. At the same time, the rest still want collection in fiat currency.
Speaking on the issue to the local press, the vice president of Venezuela, Delcy Rodríguez, who is championing the switch to Petro cryptocurrency, said,
“It is the simplification of procedures, making the State’s administrative activity at the service of the people more efficient, of the economic sectors that stimulate economic activity in the productive and commercial areas.”
However, with no official document stating the switch to payment of taxes in Petro, reports have emerged that the crypto is more likely to be used as a peg to calculate taxes rather than the actual payment method.
An ‘incognito’ switch to the dollar?
The country’s economy is facing its worst period of hyperinflation, forcing the citizens to turn to alternative currencies, the U.S. dollar being the most prominent. This has seen the country increasingly price their goods and services in dollars despite most of the people earning the ever-worthless Venezuelan bolivars.
Given the high proportion of Venezuelans holding bolivars, the government cannot price their taxes in dollarized form hence the need to switch to the Petro cryptocurrency. Petro is a crypto-backed by goods priced in dollars, which gives it a better fighting chance of inflation than the bolivar currency. This allows the government to preserve its “dollarized” taxes, even if indirectly.
However, the government does not want to deal with Petros, but rather fiat hence them pricing the taxes in petro but actually not accepting them as a tax. The sovereign crypto-only offers a middleman service between the worthless Bolivian currency and the unwanted US dollars.
The Venezuelan government will keep on pushing the adoption of Petro to its people, and the latest tax use could push adoption further. President Maduro authorized the use of PTR token during the opening of an International Casino in a luxurious hotel, in the city of Caracas this April.
A month later, fuel across the country was subsidized for users who used PTR as a payment option.