National Urban Policy
Venezuela is a decentralized federal republic divided into states and municipalities. Although Venezuela is a federative state and has advanced in the creation of laws for municipal decentralization with respect to administrative and political matters, in the area of financing it continues to have a high level of dependence. The municipalities have the autonomy to administer and collect their own taxes, which become an important source of their income, especially for the municipalities where the main industrial activities are located. However, transfers from the central government continue to be the main source of income for most of them through the transfer of the Situado Municipal, which is one of the most important.
The states do not have the capacity to collect their own taxes nor the capacity to borrow, which makes them more dependent than the municipalities on transfers from the central government.