UPDATE 1-Venezuela shakes up windfall oil tax
CARACAS, Jan 28 (Reuters) - South American OPEC member Venezuela is modifying its windfall oil tax system to redistribute revenues and channel more dollars to the Central Bank, the energy minister said on Monday.
Changes to the complicated tax structure and allocation of revenues will mean $3 billion less this year for the off-budget Fonden fund for social projects, Rafael Ramirez said. Fonden received $15.6 billion from state oil company PDVSA in 2012.
The Central Bank, though, would receive an extra $2.5 billion from PDVSA this year, Ramirez told reporters, relieving some of the pressure to supply greenbacks to needy businesses and importers due to Venezuela's currency controls.
"By selling those dollars to the Central Bank, we are going to have more resources and be able to cover our commitments," he said. "There is enough foreign currency to sustain the national economy."
More oil revenue funds would also go into the national budget and regional allocations, the minister said at a news conference.
Ramirez showed the signature of President Hugo Chavez, who is convalescing from cancer surgery in Cuba, on the proposed legislation which still needs parliamentary approval.
"Tomorrow we are going to send the bill to the National Assembly, we must comply with procedure," he said.
Changing a previous sliding scale, PDVSA and foreign partners will have to pay the state 20 percent of income from sales of oil between $55-80 per barrel, 80 percent between $80-100, 90 percent between $100-110, and 95 percent over $110.
The scale from 2011 had PDVSA and its foreign partners paying 80 percent of income from sales of oil at more than $70 per barrel, rising to 90 percent when prices reach $90 per barrel. All income from prices over $100 per barrel was taxed at 95 percent.
Chavez first introduced a windfall tax in 2008 of up to 60 percent on revenues from oil prices over $100 per barrel, based on the ideas of Nobel Prize-winning economist Joseph Stiglitz.
In 2011, the taxes were ratcheted up to a maximum of 95 percent for oil over $100, bringing in timely extra revenue before last year's presidential election that Chavez won.
Venezuela's oil sector has been the driving force of Chavez's socialist reforms, contributing funds to a wide array of education, health, housing, sports and other programs.