Technical Secretary to the Presidency Carlos Despradel said that the IMF now requires that Congress pass the bills legalizing new taxes prior to resuming the assistance program. While the general consensus is that the IMF is the bad-tasting medicine the DR needs to take, the unknown is how soon or whether the Chamber of Deputies will give its blessing to all the proposed new taxes. During the first three years of the Mejia government, Congress had shown itself to be most complacent to bills sent by the Executive Branch. With the popularity of the Mejia administration on the wane and the discord between the factions of the ruling party escalating, this strong support could falter. For instance, the Chamber of Deputies has been stalling on the 5% tax on exports, which was already okayed by the Senate. Contrary to the case of the Chamber of Deputies, the ruling party is almost an absolute majority in the Senate, with only two opposition party senators (one for the PLD and the PRSC) of the total 32 senators.
Congressional approval is needed for the 30% increase to the luxury tax on tobacco and alcoholic beverages, the new levies on loans and savings borrowing, the 5% export tax, the 2% tax on imports and the US$10 increase in the departure tax being implemented at present, among other measures that are tied in to the IMF agreement. A 1.5% tax on gross revenues of medium- and large-sized business that expires this month also needs a Congressional endorsement to be reinstated legally. These revenues are also contemplated in the National Budget for 2004.
The IMF also requires that the government “adopt steps to ensure the efficient and transparent function of the foreign exchange market.” This requirement seems to contradict the present governmental pressure being exerted on the market to push the rates down. While exchange houses and banks may have available small amounts of foreign currency to the general public, for the credit card payments of their clients and for select customers, in general the demand transactions are not being met at the set rates.