Fiscal System

The question of whether there exists a link between politics and economics cannot be denied, as economic conditions are often determined by the political system, institutions and ideology present. The interconnection between these often impacts the management of resources, and in turn the fiscal regime within the country.

Political economic ideologies of the world, mainly divided into three main categories; Capitalism, Socialism and Mixed Economy, directly affect the important fiscal issues. They include:

* The Objectives of the Government.

* Ownership and control of natural resources.

* Mechanisms for sharing and allocating revenues accruable from resources.

* The type and nature of fiscal regime in place.

The Socialist ideology, upon which this paper is based, stresses the collective ownership and control of wealth, in which the means of production rest in the hands of the state, but for the good of the people. It is important to note that, these means of production include the major industries in the economy.

The reemergence of the socialist movement in Latin America, has brought with it changes in fiscal regimes within the continent. The recent emphasis on the petroleum fiscal regime of the socialist economies of the region, attest to the influence of socialism on the hydrocarbons resources.

This paper seeks to analyse the Socialist fiscal regimes of Bolivia and Venezuela, with a view towards identifying the effects which the socialist ideology has on these regimes. It will also adopt the comparative approach, in order to examine the regimes in these countries, in the light of international practices and principles.

Chapter Two of this paper will give a brief overview of the fiscal regimes of Bolivia and Venezuela, as well as the main the objectives of the governments in these countries. Chapter Three highlights some criteria for evaluating fiscal regimes in general. Chapter Four will analyse the Bolivian and Venezuelan socialist regimes based on the selected criteria of Chapter Three. The conclusion of this paper will seek to provide answers to the question of whether Socialism does affect petroleum fiscal regimes.