"DR tax reform wins approval"



Anyone know when this goes into effect?

SANTO DOMINGO, Dominican Republic, Dec 27 (Reuters) - The Social Democratic
government of President Hipolito Mejia, seeking to inject more social justice
into the Dominican Republic's economic boom, has finally won approval from
parliament for its controversial plans for tax increases to fund more public

The program, which includes the creation of some new taxes and increases of
others, has been fiercely criticized by opposition groups and businesses
since the government introduced it in September. Critics say the package will
jeopardize jobs and push up the cost of living.

The bill was approved by the lower house of parliament on Tuesday, having
been passed by the Senate earlier this month.

Mejia, who took office in the Caribbean nation in August after winning a May
election as the candidate of the center-left Dominican Revolutionary Party,
pushed the tax bill through the lower house after reaching a pact for support
from veteran former president Joaquin Balaguer, leader of the opposition
Reform Social Christian Party.

The package could not have gone through without this backing to counter
opposition from the other main political party, the centrist Dominican
Liberation Party of former president Leonel Fernandez.

The nation of 8 million people enjoyed growth rates of up to 7 percent a year
under Fernandez' reformist government -- the fastest expanding economy in
Latin America -- but 20 percent of the population still lives below the
poverty line.

Mejia won the election on a tide of discontent among voters who felt the
nation's economic boom had sidelined the poor. Since taking office he has
made clear he does not want to govern what he called a fiscal paradise and
said he must establish a "culture of paying taxes."

Under the tax plan approved on Tuesday, the Tax on Transactions of Industrial
Goods and Services (Itebis) rate went up to 12 percent from 8 percent, and
its reach was expanded to include virtually all commercial transations, with
the exception of food and medicines.

The program also imposes a 4 percent tax on credit card transactions, raises
cigarette and alcohol taxes by up to 50 percent and calls for businesses to
pay 1.5 percent of their taxes in advance.

Parliament also approved a tariff change that reduces the top import tax to
20 percent from 35 percent, paving the way for ratification of free trade
agreements reached between the Dominican Republic and countries of Central
America and the Caribbean trade grouping Caricom.

The tax reforms had been widely criticized by business groups, media
organizations that feared revenue would be slashed amid a new tax on
advertising, and church groups warning that the cost of living could shoot

14:47 12-27-00

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