The Dominican Republic will submit a formal appeal today, Wednesday, to the WTO regarding the decision by the WTO that favors Honduras in a case that involves the cigarette tax stamp on Dominican and other nation’s cigarettes. The decision would also oblige the nation to eliminate the 13% exchange commission that is currently charged on all imports. Juan Guiliani, the Vice-Minister of Foreign Relations in charge of economic affairs, told Diario Libre reporters that even though the WTO decision is under appeal, the Dominican government is continuing its efforts within the diplomatic arena in Honduras.
The case dates back to 2002 when Honduras submitted a complaint to the WTO regarding unequal treatment because imported cigarettes are given a tax stamp and local cigarettes are not. In the complaint, Honduras also took advantage of the situation to argue that the exchange commission was also an illegal and discriminatory tax.
The Dominican government receives RD$20 billion a year through this commission on dollars used to purchase goods and services abroad.
The process continued without the Dominican government seeking some sort of diplomatic solution and in November of 2004, the WTO ruled in favor of Honduras. The sentence annuls the stamps and the exchange commission, an item that the government is not willing to eliminate at this time, considering the obligations of the 2005 budget law. The government knows that it will not win the appeal, but, on the other hand, the appeal process can take up to three years, and this will give the government time to legislate a new tax reform package that will allow the dismantling of the exchange commission without generating a budget deficit.