Unpopular populist?

This article is the first draft of a news/feature piece co-written by me and a friend in Caracas concerning new taxes to be imposed by Venezuelan President Hugo Chavez. It was received by the The New Statesman's editorial but was not published as the constitution referendum issue (see above) took precedence.

Caracas, Venezuela -- Miguel Romero leans against his dented old station wagon and sparks up another Belmont, his hands black from handling newspapers and ink rollers. Standing outside having finished another shift at the newsprinters in north-eastern Caracas, he inhales deeply and lets out a thick cloud of smoke. "I don't how long these price hikes can last, you know, this is our way of life," he says, savouring the nicotine rush. "We come home from work and crack open a bottle, smoke cigarettes and drink."

Romero is referring to Venezuelan President Hugo Chávez's new tax proposals. The president intends to impose heavy taxes on imports such as yachts, hummers, second homes and private aircraft, but what worries many – including regular pro-Chávez Venezuelans like Romero – is the inclusion of cigarettes and alcohol – particularly whiskey – on the tax blacklist.

The unconventional president is aiming to kill two birds with one legislative stone. Not only will this raft of new taxes hit the super-rich for indulging in luxury pursuits such as sailing big yachts and driving sports cars; Chávez hopes to create the "new man" by "freeing" ordinary Venezuelans from harmful vices like drinking, smoking and the "capitalist values" of "excessive consumption". Chávez has said all Venezuelans should aspire to be like leftist revolutionary icon Ernesto "Ché" Guevara – a man whose fans to this day insist had few vices and a complete dedication to socialism.

Taxing the rich is unlikely to meet popular opposition, but it remains to be seen how the President will square this new moral drive with the favourite pastimes of many Venezuelans, both rich and poor: spending money.

Chávez's economic reforms and social programs have reduced poverty levels in recent years, and statistics reflect this: car sales have rocketed 50 percent in the last year, and it is now estimated that Venezuelan women spend 15 percent of their income on cosmetics. But his new war on consumer spending may end up upsetting his own constituency, the vast majority of whom live in Venezuela's numerous shanty towns.

"People in the barrio prefer whisky to rum. They drink loads of beer and smoke lots of cigarettes. They spend tons of money on cosmetics imported from the U.S – they are going to see this as an attack on their way of life," said Elizabeth Zamora, a professor of sociology at the Central University of Venezuela. "Historically, spending money has become engrained in the Venezuelan psyche. As a result of years of high inflation and a lack of confidence in the banking system, most people prefer to spend money on tangible goods that increase with value over time, rather than risk losing their money altogether."

But for President Chávez, a fierce critic of US economic and foreign policy, excessive consumerism is an export of U.S economic dominance in Latin America.

"American culture has taught us if you don't have the latest car or the latest gadget you are nothing. What Chavez is trying to do is to change that mindset," said Fernando Garcia, a senior official in the Caracas mayor's office and member of the United Socialist Party of Venezuela (PSUV).

Opponents to the measures point out that taxing products out of the bargain end of the market simply denies the less well-off access to them. But official thinking is that in a country where alcoholism and heart disease are chronic problems, this could be an unpopular but necessary solution.

"You know it's funny when people attack these policies. We're not confiscating property, we're not prohibiting whisky. We are doing the same thing that Washington does to control excessive wealth," Garcia argued.

After winning two presidential elections, surviving a coup and weathering a series of crippling oil strikes, tackling excessive consumption might be Chavez's hardest goal yet. Whether he will be able to control consumer spending and change damaging habits remains to be seen, as he himself freely admits. "This society would benefit from socialist values", he says, "but it is very difficult to change our culture."