Bolivia's president-elect to levy new tax on rich people

Bolivia's President-elect Evo Morales will impose a new tax on people with more than 300,000 U.S. dollars in property after he takes office in January, Alvaro Garcia Linera, who Morales named as his vice president, said on Saturday.

But the new tax will be very different from the measure that brought down former President Gonzalo Sanchez de Lozada in 2003, Garcia Linera said, according to reports from the Bolivian capital of La Paz.

"We would be crazy to impose the kind of tax that we fought years ago," he said. The 2003 measure was a progressive income tax whereas the currently proposed tax would only apply to better-off people.

On Friday, outgoing Finance Minister Waldo Gutierrez said economic conditions in Bolivia are currently very good.

Bolivia's gross domestic product (GDP) is projected to grow by 3.9 percent in 2005, and a similar performance is expected next year. Inflation is estimated at 4.2 percent this year, down from 4.6 percent last year. The government has slashed its fiscal deficit to an estimated 1.5 percent of GDP in 2005, down from 5.5 percent in 2004.

In addition, the International Monetary Fund agreed this week to forgive 222 million dollars owed to it by Bolivia, 4.5 percent of the country's total foreign debt.

Economist Carlos Villegas, top adviser to the incoming government, said Bolivia's free market approach has driven up unemployment and fed the country's informal economy, but he added that Morales' team has not yet worked out a reform plan.

Bolivia's electoral court announced on Wednesday that Morales has won the presidential election, making him the first indigenous president in the Andean country.

Source: Xinhua