Economists at INTEC warn of deficit issues for government

The economists at the Santo Domingo Technological Institute (INTEC) are warning that “the Dominican economy cannot resist a permanent deficit, based on a yearly increase of the public debt.” Rafael Espinal, the coordinator of the Economic Department, presented a report to an audience of professionals, students and journalists that noted that “interest on the debt represents 23% of spending while servicing the debt reduces the government’s fiscal flexibility by some 40%.”

According to Espinal, the deficit will require the Tax Agency (DGII) to continue to optimize tax collections, by reducing fraud and tax evasion.

According to the DGII, the Dominican Republic shows the highest rate of tax evasion in the entire Central American and Caribbean region. The DGII estimates income tax evasion to be at 60%. He estimates evasion of the VAT tax, called ITBIS in the DR, to be somewhere between 31% and 42% for the 2007-2017 period.

According to IMF estimates the Dominican economy will grow by 5.5% in 2019 and as a result the “pressures of a limited fiscal space will continue to be a critical variable that the authorities should restrain.”

Espinal and his colleagues called for a national dialogue that would lead the way to a tax agreement accompanied by a law on fiscal responsibility that would define government spending priorities and reduce wasteful spending.

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El Nacional

8 April 2019