The fiscal reform that President Leonel Fernandez officially announced in his speech on Tuesday is slowly being modified. This is not a surprise since Presidency Technical Secretary Temistocles Montas was quoted in yesterday's Diario Libre as saying that some taxes that are considered unsuitable will be replaced. Listin Diario writes that Finance Minister Vicente Bengoa announced that instead of taxing insurance with ITBIS (VAT), it has been decided that the selective tax on insurance will be increased from 10% to 16% because, according to Bengoa, it is a quicker way to collect money since there are no deductions. It has also been announced that the 119 products that had been excluded from ITBIS during the last fiscal reform will now be taxed at 16%. El Caribe newspaper says that as a result, a pound of coffee in the "colmados" will rise from RD$85 to RD$98.60, margarine from RD$40 to RD$46.40, white sugar from RD$18 to RD$20.88 and unrefined sugar goes from RD$13 to RD$15.08. Chocolate will increase from RD$190 for a box of 60 bars to RD$220.40, and a gallon of yogurt goes up from RD$150 to RD$174.
The draft version of this reform will be given to the President today for revision.
Bengoa has defended the fiscal reform and tried to calm the tourism sector by saying in Diario Libre that the reform will not hurt competition, since hotel rooms will now be subject to a 5% tax, explaining that this particular tax only amounts to US$20 million for an industry that makes more than US$3 billion.
The reform is expected to reach Congress before 15 December so that it can be reviewed alongside the sixth review of the Stand-by agreement with the IMF, which is set for 22 December.
Moises Pineda, the Inter-American Development Bank representative in the DR, is quoted in El Caribe newspaper as saying that it will inevitably affect the poor, and asked the country's legislators to take that into account while reviewing the reform. Moises Pineda is also quoted in Listin Diario as saying that many sectors of society will be affected by the reform, but that if it isn't carried out now the economic distortions will continue. Pineda says that the reform will allow the country to take advantage of the economic resources, and explained that the government must avoid new modifications each year. Pineda also reminded the public that the final outcome will be decided by Congress, meaning that they could approve the reform as it stands, or ask for there to be more revisions.
The National Hotel & Restaurant Association (Asonahores) has reacted to the announcement of a new 5% tax on hotel rooms by describing it as "absurd and irrational", saying that it will turn the Dominican hotel industry into the most highly-taxed in the Caribbean region, as reported in Listin Diario. Finance Minister Vicente Bengoa has argued that the tax only represents US$30 million for the tourism sector, which generates revenues of US$3.7 billion a year.
Asonahores president Luis Lopez said that the minister forgets that the DR has to compete with other destinations in the Caribbean and the rest of the world, and that tourism is an export activity that the government should be stimulating instead of penalizing. He called the proposed fiscal reform a "severe blow" to the industry, adding that it will significantly increase costs. He said that in 1998, that tax was replaced with an agreement to levy ITBIS (VAT) on all-inclusive tour packages.
"This is bad news for the tourism sector and for local and foreign investment," observed the hotelier. He mentioned that the sector would also be affected by the increased tax on alcoholic beverages, as this is a major input for the sector. He went on to say that the proposed 10% increase on insurance policies would also affect the sector, because of the large investment in property as a major component of the hotel sector. Moreover, he said that increasing the tax on luxury dwellings (those costing over RD$2.5 million) would damage the promotion of the DR as a second home destination. "The tax burden that has been increasing in recent years has turned the Dominican investor into a kind of endangered species and will also end up scaring away foreign investment", says Asonahores. They warned that the tax increase would reduce the sector's competitiveness.
Business associations in Santiago and the Cibao are warning that the government's new fiscal reform proposal does not affect sports betting and gaming, or luxury vehicles. Ricardo Fondeur, president of the Santiago Chamber of Commerce said that gambling has become a growth activity in the country. Furthermore, he urged the government to establish a borrowing policy to prevent the continuation of what he called "the unfortunate situation that is consuming the country's revenues".
Economist Arturo Martinez Moya, writing in Hoy newspaper, says that the Dominican Republic internal and external debt have both increased during Leonel Fernandez's Presidency. Martinez says that the debt now stands at US$4.25 billion and that this amount is US$350 million higher than the debt accumulated during the Hipolito Mejia presidency, which he claims was US$3.9 billion in four years. Martinez points out that grace periods on debts during Mejia's government have expired, leaving the current government in search of an extra RD$65 billion in funds. The economist is also one of many who are calling for the government to tighten its belt instead of imposing another fiscal reform, and says that the government is allowed to postpone the payment of their current debts. Martinez did however point out a blatant reality of the government system. He says that if the government wants to collect RD$6 billion they would have to dismiss 30,000 government employees who earn RD$12,000 per month each, and went as far as to say that removing or reducing the subsidies on electricity wouldn't do much since the companies would then pass the cost on to the consumer.
The Office for Metropolitan Bus Services (OMSA) will be receiving RD$30 million in funds in order to improve the bus system, which has become increasingly deficient in recent months. Ignacio Ditren, quoted in El Caribe newspaper, made the announcement and said that the funds will help rescue the bus system. Ditren says that there are currently only 280 buses running routes around Santo Domingo, but that this would increase with the disbursal of this money. Ditren also said that if OMSA continues working in 2007 with its current budget of RD$48 million per month, the service would continue without difficulty.
Mediation has given rise to possibility that the impasse between Verizon Dominicana and the Tax Department (DGII) could come to an end a lot sooner than most had expected. On Wednesday night, as reported in Diario Libre, President Leonel Fernandez met with officials from the telephone company and the American ambassador to the DR, Hans H. Hertell, to discuss the situation. The next day the court, which will be hearing the case between Verizon and DGII set 27 November as the date for the trial, supposedly leaving the door open for an out-of-court settlement. Diario Libre writes that Verizon would only pay US$250 million of the total US$518 million that the DGII was claiming in tax payments, and would then be allowed to sell the company as planned.
Press reports speculate that the large sum of money could slightly reduce the impact of the controversial fiscal reform.
The problem between DGII and Verizon arose when Verizon tried to sell the company, Verizon Dominicana, to the Mexican company America Movil, prompting DGII to block the sale of Verizon, claiming that the telephone company owed the government US$518 million in back taxes. A standoff between the two sides ensued and at one point DGII said that they would not consider an out-of-court settlement with Verizon.
The situation has reached its most delicate point because America Movil has given Verizon until the beginning of December to clean up its finances and complete the sale, or rescind the contract completely.
Although the process has been conducted with a good deal of discretion and members of the election panel have been tight-lipped about it, rumors about who the next judges on the Central Electoral Board will be have begun to gather pace. Diario Libre reports that Aura Celeste Fernandez, Luis Scheker Ortiz, Ana Teresa Perez and current judges Luis Arias Nunez, Rafaelina Peralta and Roberto Rosario are all at the top of the 41-person shortlist. The selection process is now nearing its end.
The National Office for European Development Funds (OPRET) has announced that they will allocate RD$24 billion towards socially beneficial projects in the border regions. The works, according to Diario Libre, will include the construction of water supply systems for the communities of Los Roas, El Ingenio, Canada Honda, Los Fonditos, Bejucal and El Gajo, in the province of Bahoruco. Similar projects are planned for Mena Abajo, located south of the town of Tamayo.
The Armed Forces have taken a step further into the 21st Century with their surveillance technology, C4I. This hi-tech equipment will help the Armed Forces combat drug trafficking, conduct surveillance and protect maritime and land border zones. The sophisticated equipment, which cost US$50 million, is part of a bi-lateral agreement between the DR and Italy and is now one of the most advanced surveillance systems in the region, according to Diario Libre. Only Cuba and Puerto Rico are more advanced, but the Dominican surveillance system is on par with systems used in Chile, Venezuela and Argentina. The integrated communications network is made up of four important parts. The first is a network of telephone lines supported by the erection of 16 towers around the country, a mobile network of 2.4GHZ, an administrative network HF, which will be used by the Navy, and the tactical network, used by the Army. The C4I system allows for voice, image and data transmission in fractions of a second and can be disabled at the control center if it ever were to fall into the wrong hands.
Listin Diario reports that the Dominican Consulate in New York has announced that they will be reducing the price of passports. Marcos Montilla, Dominican consul in New York, said that the cost of passports valid for six years was US$200, which has been reduced to US$170 and passports that used to cost US$175 will now cost US$145. Montilla has denied that he will be dismissing employees at the Dominican consulates and has promised to manage the consular office like a private business. The Dominican Consulate has been criticized for excessive staff and the high cost of services.
It was business as usual for most citizens in Santo Domingo yesterday as the threatened strike went ahead without much fanfare or support. A 48-hour strike had been called by CNTU transport organization head Ramon Perez Figuereo in protest against the announced fiscal reform, the increase in poverty, the energy crisis and other topics of social importance, but when the time came, as reported in El Caribe newspaper, there was neither strike nor stoppage. Although Perez Figuereo described the strike as a success and reported that in Santo Domingo there was a 40% stoppage of transport and an 80% stoppage in Santiago, it failed to gain support from most citizens and drivers, as the strike was lifted yesterday at 6pm, 36 hours before it was supposed to end. National Police Chief Bernardo Santana Paez disputed Perez Figuereo's claims and said that yesterday was a normal and peaceful day.
The United States government has obtained the extradition of Edward David Pena Lora who is wanted on charges of trafficking cocaine and heroin. Pena, who was apprehended in Santiago, was handed over by the Department of Drug Control to two American officials and boarded American Airlines flight 780. Dominican courts issued an arrest warrant for Pena, and the American government asked for his extradition a few months ago. Pena was finally caught on 6 November in the Cienfuegos area of Santiago.
In related immigration news, 56 Dominicans, 35 of whom were incarcerated for drugs, have been repatriated. According to Hoy newspaper, this brings the total of repatriated Dominicans to 833 for the year. The 56 deportees were accompanied on the flight by US law enforcement officials and upon their arrival in the country were turned over to Department of Drug Control (DNCD) and police officials. Hoy reports that once they arrive in the country they are taken to the National Police station to be registered and then taken to the DNCD offices where they are handed over to family members.
American Airlines and American Eagle have announced that during the holiday season there will be a decrease in the volume and the weight of luggage allowed on the plane per passenger. During this period AA won't accept boxes, and passengers will be limited to just two pieces of luggage and one carry-on item. The weight of the luggage cannot exceed 50 pounds or be more than 67 inches in height. Carry-ons cannot weigh more than 40 pounds and cannot be larger than 45 inches. The seasonal restrictions go into effect on 1 December and end on 9 January.
The DR baseball team will receive US$500,000 for reaching the semi-finals of the World Baseball Classic, that was held in March this year in the US, Puerto Rico and Japan. Hector Pereyra, president of the Dominican Baseball Federation said that the money would begin to arrive in December. He said that 50% of the award would go to the ball players who played in the matches. The players have accepted that the remaining 50% will go to the country's regional courses for baseball instructors and physical education teachers, and to stage three national baseball tournaments in the 9-10 age group in 2007, the 11 to 12 age group in 2008 and the 13 to 14 age group in 2009.
There were no games last night, but this weekend looks to be an important one as the Tigres try to gain some breathing space between themselves and the rest of the pack. Meanwhile the Gigantes, Escogido, Aguilas and Estrellas will all try to gain some ground on the league-leading Tigres. The Azucareros on the other hand will just try to avoid more embarrassment as they try to salvage the season.
Tonight's schedule:
* Estadio Quisqueya- 7:30pm
Aguilas vs. Escogido
* Estadio Julian Javier- 7:30pm
Estrellas vs. Gigantes
* Estadio Francisco Michelli - 7:30pm
Licey vs. Azucareros
Standings
| Team | W-L | Avg. | Games Behind |
| Licey | 16 - 8 | .667 | - |
| Gigantes | 13 - 11 | .542 | 3.0 |
| Aguilas | 13 - 11 | .542 | 3.0 |
| Estrellas | 12 - 12 | .500 | 4.0 |
| Escogido | 11 - 13 | .458 | 5.0 |
| Azucareros | 7 - 17 | .292 | 9.0 |
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