The tax proposal sent to the Chamber of Deputies by President Hipolito Meja is running into the usual obstacles. The first hurdle the new legislation had to get over was the heated debate about what to do with the proposal. After much heated debate, the decision was to send the bill to a special commission on finance that meets today. Despite the fact that a special commission comprised of legislators from all the parties in the lower house had agreed to place the new legislation as the ninth item on the agenda, members of the PRD and the PRSC parties fought it from the very beginning. Alfredo Pacheco, the Chamber of Deputies leader, found it necessary to submit the proposal to include the legislation on the agenda no less than three times, while calling for order in the chamber no less than six times and declaring a five-minute recess that extended for more than half an hour in order for the dissenters to come together and include the piece on the agenda. When work started in the Chamber of Deputies, PRSC spokesman Luis Reyes Ozuna strongly criticized the government and the incoming PLD because the PRSC had not been included in the proposal?s study. Ozuna promised stiff opposition to the reform on those grounds. By a vote of 81-3 the legislation was sent to the Finance Commission of the Chamber of Deputies for review. The president of the commission, PRSC Deputy Marino Collante, told the press that he would call his members into session today to try to establish a work calendar and the methodology to be used in their study.
Reaction to the new tax proposals has been neither slow nor timid. Quico Tabar, the head of the Internal Revenue department, told reporters from the Listin Diario that the tax reform as it now stands will hurt the middle and lower classes the most. He argued that the legal base for tax collection and administration should be revised in order to become more efficient. His request to reform the current tax codes is based on the fact that not only does the old code offer few barriers to tax evasion, but it creates ?incentives to evade the payment of taxes.? Tabar Asilis compared the current tax code to attempting to hold water in his closed fist. No matter how tight the fist, the water seeps out. He said the new proposals will merely add more water without fixing the leaks in the fist.
Over at Hoy, economic editor Mario Mendez writes that there is a generalized worry that the debates on the new proposals will drag on for a long time, perhaps even surpassing the 16 August inauguration date for the PLD government. According to his sources, Mendez says it is practically impossible for the tax proposal to be passed through Congress before 16 August, which would allow the PLD government to start out with the IMF Standby agreement in place and ready to assist the new authorities. Opposition to the new tax scheme is coming from many sectors, including the banking sector that sees the proposed tax on savings and interest-bearing certificates as a serious threat.