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Venezuela Raises Taxes on Luxury Items to Bolster Economy

FILE - A sculpture of oil workers — figures who represent an industry critical to Venezuela's economic well-being — decorates a sidewalk in Caracas, Oct. 23, 2014.

Venezuela will increase taxes on luxury goods, alcohol and tobacco to help shore up the government's finances, the top tax official said, as falling oil prices threaten the OPEC member's coffers.

Buyers of luxury goods, including cars worth more than $30,000, will pay an excise tax of 15 percent, up from 10 percent, tax chief Jose David Cabello said late Tuesday during a televised ceremony with President Nicolas Maduro.

The measures, part of a package of 28 laws Maduro decreed to bolster the country's economy, increase tax rates on products such as wine and cigarettes while eliminating some tax benefits available to financial institutions.

"Who pays luxury taxes?" Cabello said during the ceremony. "People who buy yachts, planes, or large properties — people that make excess use of money."

Cabello on Wednesday clarified that the taxes would not affect beer, because it is "the most popular beverage."

Venezuela's economy is widely believed to be in recession, although the central bank has not published official GDP figures for this year.

A decline of nearly 30 percent the price of oil since June combined with inflation of above 60 percent and a sustained decline in international reserves has heightened investor concerns about the country's capacity to service debt.

Maduro has said his government has the resources to make the payments and has no intention of defaulting on bonds.