Bolivia’s new President Rodrigo Paz has said that he plans to scrap a ream of taxes, in one of his first moves since becoming the nation's first conservative leader in nearly two decades on a bid to rescue a crisis-stricken economy.
Just over two weeks since taking office, Paz also announced that his government would slash 30 per cent of total federal spending from Bolivia's 2026 budget to reverse years of populist economic measures taken under the long-ruling Movement Toward Socialism, or MAS, party. He did not give further details on how his government would make such deep cuts.
Speaking to reporters, Paz said he was first proposing to repeal Bolivia's national wealth tax, arguing that it had crippled growth and discouraged billions of dollars in investments since being imposed by his left-wing predecessor, former president Luis Arce.
Another levy on the chopping block is Bolivia's 0.3 per cent tax on everyday financial transactions, Paz said, something that long motivated Bolivians to keep clear of the formal banking system and instead stash their savings under mattresses and floorboards.
“We are giving the first signs of security that the country requires,” Paz said. “We are paving the way for economic activity.” The bills to remove the taxes must be sent to the Congress for approval before taking effect.
Business leaders are already thrilled. “The persecution of the private sector is ending," said Klaus Freking from the country's main agricultural chamber. “It is the beginning of legal certainty.”
But Paz and his Economy Minister José Gabriel Espinoza said that for now, their government wouldn't touch the pillars of Bolivia's economic model under the MAS party — specifically, the country's fuel subsidies that keep its retail price of gasoline among the world's cheapest, as well as its fixed exchange rate that became distorted as the country's central bank ran out of US dollars.
“The president is starting off on the right foot, aiming to generate better investments,” said Bolivian economic analyst Gonzalo Chávez. “But he's not addressing the core problems.” Paz is sticking to his campaign promise of deploying gradual measures — as opposed to a shock fiscal adjustment of the kind that Bolivians have known and feared since the 1990s — to dig Bolivia out of its worst financial crisis in four decades.
Also read: Centrist Rodrigo Paz claims victory in Bolivia election
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