Representatives of the manufacturing community are suggesting that the government should use the present surplus in revenues to eliminate taxes that distort the economy and penalize those who produce goods and services here. Yandra Portela Vila, president of the Association of Industries of the Dominican Republic said the government had collected RD$1.36 billion above what had been budgeted. This could mean a surplus of RD$4.36 billion by the year’s end.
Portela said the surplus could compensate for the fiscal impact of eliminating of the 13% exchange surcharge, deemed illegal by the World Trade Organization, and the up to 3% tax on capital goods imports.
Portela spoke at a luncheon with economic reporters at the AIRD. Also participating were Circe Almanzar, Ligia Bonetti and Ernesto Vilalta, president of the Asociacion de Empresas Industriales de Herrera.
The business sector spokesperson says that instead of creating new taxes for the government to maintain its income, what needs to be done is to reduce tax evasion, so that small and medium sized businesses pay their taxes and more in the informal business sector pay taxes. She added that an improvement in the quality of government spending is also necessary.
As reported in the Listin Diario, the industrial sector’s position is that when the DR-CAFTA free trade agreement comes into effect, the country’s tax scheme should be the same as that of its competitors. She called for the elimination of the 13% exchange rate surcharge, and the up to 3% tax on raw material imports.
For the pharmaceutical sector, she said it is necessary to equate intellectual property conditions with the other DR-CAFTA signatories, as well as providing compensation for the luxury tax and establishing its depreciation.
They also request the acceleration of the depreciation of capital goods; mechanisms to compensate for advance payments of ITBIS (value-added tax), elimination of the consular invoice, and that investment in repairs and improvements can be deducted as expenses by agribusiness.
The business representatives consider that experience with the free trade agreement signed with Central America shows that the DR has not been able to compete. They explain that over the past five years, other countries have taken advantage of the agreement to export more to the DR, taking market share away from Dominican produce. “Why should it be any different with the FTA signed with the US?” asks Portela.