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Venezuela Plotting to Levy Taxes Through Oil-Backed Petro Cryptocurrency

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The Bolivarian Council of Mayors in Venezuela agreed to sign the “National Tax Harmonization Agreement” which incorporates oil-backed petro cryptocurrency as a means to raise taxes and sanctions. The new move has led to broader adoption and use of the state-issued cryptocurrency.

The government has also revealed that the Vice President of Venezuela, Delcy Rodríguez, will oversee the execution of a single taxable person registry through a digital consultation tool. In addition, she will supervise the creation of a data tracking and exchange network for firms to record tax payments through the oil-backed petro cryptocurrency.

Some municipal governments lack means to collect taxes in petro cryptocurrency

Notably, the South American nation has a total of 335 mayors in which more than 90 percent are under the United Socialist Party of Venezuela, led by President Nicolas Maduro. Only 30 mayors are under the opposition regime in Venezuela. The municipal governments led by anti-Maduro mayors are still levying taxes in the Venezuelan domestic currency, Bolivar. Most of these municipalities do not possess the necessary technology to collect taxes in petro cryptocurrency.

Commenting on the new move, the vice president stated:

“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, framed in this week of flexibility that began on Monday.”

Maduro still pushing for greater petro adoption

According to sources, Venezuela’s government recently revealed more than 15 percent of all fuel payments; petro cryptocurrency is used to settle at gas stations in the South American nations. The government has introduced subsidies for every person who pays at petrol stations using the state-issued token. In addition, a Ultimas Noticias report suggests that 40 percent of petro transactions went through petrol stations overseas.

Over the past few years, Venezuela has undergone severe inflation that has resulted in economic distress. The government introduced the petro cryptocurrency, backed by oil mined in the country, to counter hyperinflation. Back then, the cryptocurrency market was at its pinnacle, however, the country is facing severe trade sanctions on allegations of corruption within its government. The head of the state-backed crypto was recently listed on the FBI’s most-wanted list.

Venezuela Outlaws Crypto Mining Activities in the Country

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Venezuela has recently banned the trade in crypto mining in the country. The ban is mainly aimed at citizens who reside in all government-owned houses and in all their surrounding vicinity. In a maiden announcement on Friday, Minister of Habitat and Housing, Iidemaro Villarroel, said that the continued use of crypto mining could have an impact on the distribution of electricity in the country.

Besides, the Minister said Crypto ‘s ban on mining was part of the Great Home Project. In his speech, the Minister revealed that crypto mining and other instruments involved in its operations consumed a lot of power. This, in turn, violated the government’s already formulated electricity distribution policy. He added,” In this coordinated work, we have detected the harmful effects of these elements of high electrical demand in the public houses of the Grand Mision Vivienda project.”

Venezuela’s Great home project plans

The Great Home Projects (Gran Misión Vivienda) involve the government’s plans to provide grant housing to local Venezuelan citizens with low incomes. The government is targeting the poor and providing them with adequate housing despite the harsh economic environment that the county is currently facing. And the government has also managed to deliver around 3 million homes to the citizens in their efforts towards the project.

Around 151 houses were also distributed to different families in the nation’s capital of Caracas; back last year. It is precisely these government-owned houses and their surroundings that have notified the ban. They insist that all crypto mining trades in these households are considered illegal and a crime punishable by law.

Crypto mining effects on the country’s electricity supply system

The Venezuela government has attributed the Crypto mining trade to directly affecting the power grid. They insist the mining process tends to consume a lot of power, thus affecting the distribution of electricity throughout the country. Back in 2019, there were reports of the national electrical shutdown after the Guri hydroelectric dam failed; further proving a significant problem that needs to be addressed.