Venezuela To Increase Value-Added Tax To 12% From 9% -Chavez

Venezuela will increase its value-added tax and almost triple its domestic debt issue plans to counteract a drop in the price of oil that is squeezing the government's finances. President Hugo Chavez said Saturday in a countrywide television broadcast that the government will increase the value-added tax to 12% from the current 9%. The government will also almost triple its domestic debt issue plans to 34 billion bolivars ($15.8 billion) from the previous forecast of VEB12 billion. Chavez ruled out devaluing the currency, which is pegged to the dollar at rate of 2.15 bolivars. He also said that he won't increase the price of gas, which is among the cheapest in the world. Venezuela will lower its oil price forecast to $40 per barrel from $60 per barrel, which is used to calculate its 2009 budget, Chavez said. The government will also reduce its 2009 budget by 6.7%, shrinking it to 156.4 billion bolivars ($72.7 billion). The measures are geared "to confront a great threat that originates in the economic model defended by the national bourgeois," Chavez said before unveiling the measures Saturday during a countrywide television address. The president staunchly defended his government's socialist-inspired agenda and pledged that the plan would "protect what we've been achieving."