Thursday, February 21, 2008

CADIVI sued by ARAUCO

Caracas Daily Journal (Vincent Bevins): The National Supreme Court has admitted that CADIVI is now defending itself against a lawsuit filed by the National Alliance of Consumers and Users (Arauco). Earlier this week, CADIVI announced that it would not increase the limit on dollars emitted for internet purposes.
The Tribunal Supremo de Justicia (Supreme Court of Justice) has received a lawsuit against CADIVI revolving around the suspension of prepaid credit cards, the limits on travel to certain countries, and the reduction of the remittances for travel to certain countries.
CADIVI is the federal agency, founded in 2003 when the currency control started, which emits dollars to Venezuelan citizens at the official exchange rate, $1 for every 2.15BsF. This rate is much better than what would likely be received with floating currencies, but there are some problems.
Proponents argue that the policy keeps money in the country for endogenous development and gives all Venezuelans a good rate. But often, market problems are replaced with bureaucratic problems when it becomes difficult to manage the entire scheme.
Arauco is saying that the limitation of travel to Panamá, Aruba and Curazao violates the right to free travel, that the reduction of internet limits for spending from $3,000 to $400 has no base in law, and that the suspension of prepaid cards is discriminatory against those that don't have credit cards.
"The Supreme Court of Justice considered it worthwhile to open an oral case concerning the CADIVI issue…There are serious constitutional problems here…as well as article 21, which says we are all equal before the law. It can't be that we all have to have a credit card to have dollars, that is discrimination," said Roberto León Parilli, head of the organization.
Citizens used to have a card they could simply put their cash on, but now a credit card, which might have exceedingly high interest rates in order to keep up with inflation, is required.
The problem with internet spending is that it is incredibly easy to cook up a scheme to use the internet to multiply one's money using the black market and a foreigner. However, internet purchases are increasingly well-advised due to the current nature of the global economy.
Arauco has also demanded that CADIVI stop publishing lists of people who have been caught unable to explain their spending. The list currently contains 36,000 names.
With regards to the internet, Parilli's argument is that those who have actually broken laws should pay, not everyone through a reduction in the amount granted for internet purchases. No word on when the TSJ will be reaching a decision.

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