The Chamber of Deputies has approved the much debated tax reform package on Saturday, after the second reading or revision of the bill. The approved bill gives the government RD$24.358 billion of the RD$32.477 billion that it asked for. The legislation taxes fuels – gasoline and diesel – by modifying article 1 of the Hydrocarbon Law 112-00 in such a way that the tax on a gallon of gasoline is increased from RD$40.49 to RD$50.48, and established a tax of RD$13.95 for most diesel fuels. The vote was 110 in favor and nine against.
Now the legislation has to go to the Senate. The original legislation was introduced in a special session of the Chamber of Deputies on 23 November, and had been subjected to several changes. Among the changes is the requirement to charge an ad-valorum tax of 17% on the value of all new vehicles (CIF) when being registered for the first time.
The reaction from the industrial, farming and business communities was quick, and it was not a happy one. The National Council of Private Enterprise (CONEP) declared that the Chamber of Deputies had introduced “distortions and mistakes” in the tax system, and the Dominican Chamber of Merchant Businesses rejected the legislation out of hand. The main opposition parties, the PRSC and the PRD, had differing opinions about the bill. The PRSC felt that the bill should pass through the Senate just as it is. The PRD recognized that the reform package was a “bitter but necessary pill to swallow”.
Today’s Listin Diario says that both the government and the business community are unhappy with what the deputies have approved. According to journalists Candida Acosta and Abrahan Montero, government spokespersons called the legislation “absolutely unacceptable” because of the RD$7.0 billion reduction in money generated. They said that the deputies had “damaged” the project, and were putting the IMF agreement as well as the DR-CAFTA agreement in jeopardy. CONEP president and chief spokesperson, Elena Viyella de Paliza, told reporters that she hoped that the Senate would remove the “distortions and the mistakes” from the legislation that was passed by the deputies. Viyella de Paliza accepted that the Chamber of Deputies had done the best that they could but insisted that they had also introduced some distortions into the legislation that make in unacceptable to the business community. She insisted that the tax reform package be passed at the same time as the 2006 budget bill so as to reduce the Executive Branch’s discretional use of funds.