New Fiscal Reform - News, Questions, Musings, Opinions

Feb 7, 2007
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I will start this thread to discuss anything related to Reforma fiscal. News, opinions, questions and answers.

I will start with one.

The increase of 2% ITBIS on Telecommunications -
According to Tecnolog?a y Telecomunicaciones - DiarioLibre.com
this increase will cause over 100,000 people to not be able to afford paying for Internet any more. I highly doubt that and I consider this a form of Dominican press sensationalism. If we consider that average Codetel user pays RD$2.000 per month for Internet with basic phone line with is about RD$1.560 in service cost (the rest are taxes). ITBIS is paid on the service base cost (RD$1.560) so the increase of 2% in ITBIS will result in RD$31 pesos of additional taxes. I DOUBT there will be even a thousand people who would cancel their internet service because now it will be 31 pesos more expensive. There may be few that will cancel, but far very far from 100 thousand users that media try to imply.

BUT the situation may not be the same with cable service. Up to now, cable service paid only 16% ITBIS, it did not pay 2% telecom rural tax and 10% selective tax. A 500 pesos basic package ended up costing 580 pesos. Now the same package will cost 754 pesos. And THAT is some difference. Almost 200 pesos difference in tax, on a 500 pesos base price package. It si possible that in cable ACTUAL subscribers will go down, but I do not expect REAL subscribers to go down. People will engage more in getting illegal cable (direct connect) or getting cable extensions from neighbors. Also for digital cable, more people will start to "share" subscriptions getting additional digital boxes and giving them to neighbors, thus splitting up the bill.