| Daily News - Tuesday, 14 December 2004 |
The Fernandez government is objecting to the Senate's approval of a bill that reduces the amount of taxes to be paid by the agribusiness sector, as part of the conciliatory measures being developed for the sugar industry. These negotiations aim to appease the powerful lobby into accepting the removal of the controversial surcharge on future corn syrup imports, which is currently providing an obstacle to the passage of the Free Trade Agreement with the United States. The director of the Tax Department, Juan Hernandez, and the director of Customs, Miguel Cocco, were scheduled to visit the Senate today to discuss the implications of what they feel would entail a multi-bilion reduction in government collections now if the compensation package is passed.
The director of the National Planning Office, Guarocuya Feliz, and the representative of the International Monetary Fund in the Dominican Republic, Ousmene Mandeng, met with the Chamber of Deputies to discuss the 2005 budget and the corn syrup dispute. Mandeng stated that the compensatory project contradicts the tax reform passed in September to cover the government deficit. The deficit was the result of overspending and mismanagement of the banking crisis by the previous government. Dominican taxpayers fit the bill for the crisis in new taxes and inflation. Mandeng, as reported in Diario Libre, nevertheless says that the compensation package could impede the signing of the IMF Stand By Agreement that would inject fresh resources into the country, most of which would be used to pay for the foreign debt that doubled during the past administration.
Mandeng said that if new sources of funds could not be found, expenses would have to be cut, a solution that does not have the favor of legislators and government.
On the contrary, the legislators want to impose the 30% wage increase given to public sector employees in January in one shot, not split into two with one increase scheduled for January and the other in July.
The Tax Department says the government stands to lose RD$4.5 billion if the sugar compensation bill goes through, while a consultancy firm hired by the Senate indicates that amount would be closer to RD$831.5 million.
The National Council of Business and the Association of Industries of the Dominican Republic are backing the compensation package for the farming sector as a whole, on grounds of the need to make the sector competitive.
A recent Listin Diario editorial highlighted that Dominican producers pay 31% in taxes on imported machinery and equipment for farming, compared to 2% in Honduras, 1% in Costa Rica, 13% in El Salvador, 15% in Nicaragua and 12% in Guatemala.
Dominicans pay the highest value-added tax in the region (16%) and must fork over a very high 10% exchange commission on imports (only Honduras has a similar tax, but of a much lesser 1.5%), among other taxes.
Jorge Ivan Ramirez, of Verizon, president of the American Chamber of Commerce, favored that the reduction in taxes be carried out in a gradual manner. The American Chamber of Commerce has been one of the most vocal defenders of the Free Trade Agreement with the United States.
Meanwhile, Ramon Menendez and Irving Redondo of Central Romana Corporation met yesterday with the Senate, and argued that what they are requesting are measures that would enable the industrial sector to be more competitive. Senate president Andres Bautista said, however, that the compensation package devised by Senator Ramon Alburquerque (PRD-Monte Plata) does not benefit all members of the agribusiness sector. He stated that the benefits of the bill that was approved in a first reading in the Senate need to be extended to the entire agricultural sector, namely those who produce rice, tobacco, corn, producers of poultry and other meat products.
Economist Arturo Martinez Moya proposed that any government revenue surplus be funneled to the Central Bank in order to reduce the quasi fiscal deficit caused by the certificates of deposit issued by that institution. Martinez Moya said that the Central Bank has issued RD$23 billion in certificates since the start of the Fernandez government on 16 August to date. He says this is illegal because the Central Bank is then financing its own deficit.
He commented that the PLD government in the past was known to play down the collections it will receive, and then use a free hand spending them on unspecified investments. He said there is a 1.3% of GDP underestimation of revenues in the budget presented by the government. Martinez Moya said that the legislators should include a provision that would make obligatory for the government to use budget surpluses to reduce the quasi-fiscal deficit in the 2005 budget law at present under study in Congress.
As reported in Hoy newspaper, Martinez Moya forecast that it is likely the appreciation of the peso will not be maintained. He estimated that the Dominican peso is overvalued in 35%. He said the rate should fluctuate between RD$35-RD$40 to US$1.
Following the appreciation of the peso that has led to significant reductions in the price of fuel, the transport unions have announced reductions in their fares. CONATRA, the nation's largest union, announced it would drop its fares from RD$10 to RD$8 for inter-city rides, and RD$5 from inter-urban rides. Similarly, he said that radio taxis would also soon drop their fares by RD$10, amounting to RD$90 per inter-city ride.
In a decision that Diario Libre says will have great consequences on the Dominican judicial system, Judge Matias Modesto del Rosario ordered that the case against business advisor Luis Alvarez Renta be carries under the new stipulations of the new Penal Procedures Code. The judge said that Article 47 of the Constitution establishes that laws will not be retroactive except when they may favor those being tried or fulfilling a sentence.
Yandra Portela, the president of the Association of Industries of the Dominican Republic, met with Juan Hernandez, the director of the Tax Department (DGII). Portela had requested information on certain taxpayers from the department, shortly after which she was accused of not paying her own taxes. As reported in Diario Libre, after the meeting Hernandez declared that all had "been duly clarified." Portela had stated that she did not have to file an individual statement because her statement was presented by the company that paid her wages and paid her dividends as a shareholder.
Great numbers of Haitian beggars have begun to appear on city streets corners in the DR. The Listin Diario reported that the cities of Santiago, Puerto Plata, La Vega, San Francisco de Macoris, Moca, Jarabacoa and Santo Domingo are experiencing an unusual influx of women with children (mostly not their own) at intersections in the cities. According to reports, in the past week hundreds of undocumented Haitians, mostly women and minors, have been posted on street corners by human traffickers with ties in Haiti. Listin Diario says that these mafias that operate the network of beggars are violating the DR's Migration and public sanitation laws while they reap tidy profits appealing to those who feel especially charitable at Christmastime.
Coinciding with the appearance of the numerous beggars, Operation Cowboy was announced along the Haitian border in an effort to control cattle robberies and cross-border movement of stolen vehicles, arms, drugs and undocumented migrants. Last week, the military operation was responsible for the arrests of at least 300 undocumented Haitians, according to El Caribe.
The First Dominican Tourism, Investment and Real Estate Trade Show is being planned for 18-19 February 2005 at the Radisson Hotel & Convention Center of Miami, Florida. In view of the estimated 375,000 Dominicans living in the state of Florida, the fair seeks to increase the flow of business and trade that exists between Florida and the DR. Florida is already the main port of entry for Dominican goods to the United States.
On the program of events, is a ribbon-cutting ceremony with First Lady Margarita Cedeno and a business luncheon with a speech by Eddy Martinez of CEI-RD and Enrique Eduardo de Marchena of Asonahores. Tourism Minister Felix Jimenez will be the keynote speaker at the Dominican dinner during the event. Simon Suarez, a past president of Asonahores and CHA, will introduce him.
Co-sponsors include the Dominican Consulate in Miami, the Ministry of Tourism, the Center for Export and Investments (CEI-RD), the Association of Hotels & Restaurants (Asonahores) and the Association of Dominican Real Estate Businesses. The event also has the support of the Association of Dominican Professionals in Florida, the Dominican-American Chamber of Commerce of Florida, and the Dominican-International Chamber of Commerce of Florida. Other sponsors are Fiduciary Investor Services, the Miami Herald and American Airlines. For more information, contact the Florida Dominican Business Development Group at fla-dombusiness@dibacorp.us
New York may after all catch Pedro Martinez, who spent seven years with the Boston Red Sox and finally made it to the World Series winning team in 2004. The Major Leagues website (mlb.com) reports today that the National League's Mets have offered Martinez a four-year deal worth some US$56 million. The Mets outbid the Sox at the last minute by adding a lucrative option for 2008.
Omar Minaya, the Mets spokesman, said that before the signing, Martinez would have to pass a physical. The 33-year-old right-hander suffered a small tear in the labrum of his pitching shoulder in 2001 and opted to treat the injury with a strength and conditioning program, rather than surgery.
Martinez holds a 117-win and 37-loss record from 1998-2004, with a 2.52 ERA for the Sox. His performance declined last season, when he went 16-9 with a career-high 3.90 ERA. He also won three American League Cy Young Awards. MLB.com says that the Mets may also pursue Moises Alou. Martinez lured fellow Dominicans Manny Ramirez and David Ortiz to Boston, and the threesome were key to the winning of the 2004 World Series, its first in 86 years.
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