One of the three economists who worked on the tax reform for the incoming Leonel Fernandez government, Rafael Camilo, gave an interview in Saturday?s Listin Diario, in which he expressed his surprise at the widespread opposition to the fiscal package submitted to Congress by President Hipolito Mejia. Camilo and his colleagues Juan Hernandez, a former tax director, and Daniel Toribio, finance minister during the previous Leonel Fernandez administration, basically devised the package by taking the proposals made by the consultants contracted by the Mejia government, and made minor additions and modifications.
Camilo said that if the proposal is not passed before 16 August, the new authorities will have to impose transitory taxes to close the financial gap that is estimated at RD$22 billion in order to resume the standby agreement with the International Monetary Fund. The resumption of the accord would mean an injection of new funds at the onset of the Fernandez government. Of the total funds connected to the IMF agreement, only US$160 million has been disbursed, with another US$440 million in assistance funding pending. Camilo expressed his surprise at the reform package?s unpopularity because he said the technicians met four times with representatives of the private sector, particularly with the National Council of Business (CONEP), and on two occasions President-elect Leonel Fernandez was present. On neither of those occasions, said Camilo, did they voice such strong disagreement, nor did they deliver any proposal for an integral reform. CONEP is calling for tax reform to stimulate the productive sectors without further penalizing consumers with higher costs. Camilo did say the business proponents had proposed extending the number of items taxed by the ITBIS (VAT), in the understanding that this would affect them less.
Camilo said that the package submitted to Congress is not the work of the PLD, but rather of the current PRD government. He said that Finance Minister Rafael Calderon, Central Bank Governor Jose Lois Malkun, Technical Secretary of the Presidency Carlos Despradel, and three IMF technicians that included the permanent IMF representative in the country, Ousmene Jacques Mandeng, participated in drafting the proposal.
Camilo washed his hands of requests being made for the government to reduce spending. He said they cannot address the problem of spending ?because we are not in government.?
Earlier Camilo had said there would not be a significant decrease in government payroll spending because of the planned wage increases to be paid for by a reduced number of employees on the government payroll. He said this would happen administratively as soon as the PLD government takes office.