Economist Pedro Silverio Alvarez is urging the government to take the route of seeking more efficient spending instead of continuing to increase the burden on taxpayers. In an opinion piece in Diario Libre today, Friday 7 March, he mentions two studies that can serve as references: the World Bank Global Governance Indicators study that examines the indicators of voice and accountability, political stability and absence of violence, government effectiveness, regulatory quality, rule of law and control of government to measure the way governments manage social resources and economic for development, and the IMF Working Paper “Quality of Government and Living Standards: Adjusting for the Efficiency of Public Spending” by Francesco Grigoli and Eduardo Ley.
He says that if the conclusions of these two studies are combined and applied to the Dominican Republic, it can be inferred that our country falls behind Central American countries in efficiency of public spending and corruption control. He adds that we are less efficient than the average of the 24 countries included in the second study. He says the level of inefficiency and corruption is over 35% of public spending.
He concludes that public spending is a major source of distortions for the Dominican economy. These distortions are associated with inefficiency, whether for corruption or negligence that means an excessive use of resources or inputs to generate the same level of goods and services.
“In consequence, it is counterproductive to talk about increasing the tax burden when postponing a reform of public spending,” he writes. Silverio says that the tax legitimacy has to be earned through a public spending policy that translates into public services of reasonable quality. “Meanwhile, the Dominican economy will continue to be burdened by an incoherent tax structure and very inefficient public spending,” he concludes.
Silverio was dean of economics at the PUCMM, the DR’s largest private university, for many years prior to working as governor of the Central Bank in the past Leonel Fernandez administration.
www.diariolibre.com/opinion/2014/03/07/i513701_corrupcin-ineficiencia-gasto-pblico.html
http://info.worldbank.org/governance/wgi/index.aspx#home
www.imf.org/external/pubs/ft/wp/2012/wp12182.pdf