January 28, 2013 / 6:25 PM / 7 years ago

Venezuela to modify windfall tax on oil firms

CARACAS, Jan 28 (Reuters) - Venezuela is changing its oil windfall tax bands under which the government raises income for social spending and other purposes, Energy Minister Rafael Ramirez said on Monday.

Widening a previous sliding scale, state company PDVSA and foreign partners will have to pay the state 20 percent of income from sales of oil between $55-80 per barrel, 80 percent between $80-100, 90 percent between $100-110, and 95 percent over $110.

President Hugo Chavez, currently battling to recover from cancer surgery, first introduced a windfall tax in 2008 of up to 60 percent on revenues from oil prices over $100 per barrel, based on the ideas of Nobel Prize-winner Joseph Stiglitz.

In 2011, the taxes were ratcheted up to a maximum of 95 percent for oil over $100, bringing in timely extra revenue before last year’s presidential election that Chavez won.

The OPEC member’s oil sector has been the driving force of Chavez’s socialist reforms, contributing funds to a wide array of education, health, housing, sports and other programs.

At a news conference, Ramirez added that PDVSA and Rosneft agreed in recent days to an investment plan of $37.7 billion until 2021 to develop various projects in the Orinoco belt to produce 1.1 million bpd.

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