Two key officials of the Fernández Government yesterday rejected the idea recently suggested from many quarters of amplifying the base of the Transfer Tax on Industrial Goods and Services (ITBIS). In response to the Administration’s tax reform proposal recently submitted to Congress, several legislators, business groups and economists have suggested simply expanding the scope of application of the ITBIS rather than raise the tax as high as the Administration wants (from the present 8% to 14%). The idea was rejected by the Director of the National Planning Office (ONAPLAN), Rafael Camilo, and the head of the Directorate-General for Internal Revenue (DGII), Juan Hernández. ONAPLAN helped prepare the reform plan, and DGII would be in charge of enforcing any changes made in the tax code. Both argued that many of the businesses currently excluded from ITBIS beauty salons, repair shops, dry cleaners, gymnasiums could not support payment of the tax. Camilo asserted that adding them would not generate enough revenues to cover the revenues losses anticipated under tariff-cutting proposed by the government, so why "sacrifice" them? The two officials also rejected complaints by the alcoholic beverage and tobacco industries about the proposed increase in the Selective Consumption Tax (CSI) on their products. The government had already negotiated a similar increase with these industries in 1997, but it was never applied, pointed out Camilo. Hernández argued that these industries have a significant input of imported primary materials that will benefit from the tariff reductions.
