Venezuela Extends Financial Transaction Tax To Mar 14 '04

sg.biz.yahoo.com Wednesday March 12, 10:23 PM

CARACAS -(Dow Jones)- Venezuela's National Assembly late Tuesday approved a one-year extension, to Mar. 14, 2004 for a tax applied to all financial transactions.

Currently at 1%, the tax rate will drop to 0.75% on July 1, 2003, and to 0.5% on Jan. 1, 2004.

The extension is expected to contribute about 1.5 trillion bolivars ($1=VEB1598) to government coffers by the end of this year, officials have said. This year's budget is a bit under VEB40 trillion.

Venezuela is adjusting its finances after revenues were severely affected by a two-month general strike against President Hugo Chavez's leadership that began Dec. 2.

The action virtually shut down the country's vital oil industry, which accounts for about half of government income, and badly affected tax collections as thousands of businesses, along with the stock market, shut their doors.

Economists have said the government will likely have financing needs of up to 10% of gross domestic product this year as the economy shrinks more than 25%.

The economy shrank about 9% last year.

-By Jehan Senaratna, Dow Jones Newswires; 58212 564 1339; jehan.senaratna@dowjones.com