The modifications to the proposed Fiscal Reform that have been requested by representatives of civil society and the business sector will depend on the will of the legislators beginning this week, as the administration prepares to submit the legislation to Congress. No precise date has been set for the bill to leave the Executive Branch, and as of yesterday, Sunday 21 October, they were still working on its “adjustments” according to Presidential Palace sources. Nevertheless, the lack of an agreement between the administration’s economic team and the Economic and Social Council, which last Friday said that the negotiations were over, suggests that the legislation will arrive in Congress with the same taxes with which it was announced last 4 October. They include an increase from 16% to 18% in the value added tax or ITBIS, and new taxes on several products and services.
The stalemate with the CES, composed of representatives from civil society and the business sector, arose when the administration refused to discuss reducing spending to RD$410 billion for next year, so taxation increases for 2013 would not be necessary.
Temistocles Montas, the Minister of Economy, Planning and Development, insists that the 2013 budget should be RD$469 billion in order to deal with the country’s needs.
In response, the Dominican Republic Association of Industries (AIRD) expressed doubts that the government had any real interest in discussions with the CES since – they claim – they did not admit other alternatives and limited themselves to presenting the tax reform as inevitable.
“On Friday, the administration team concluded the dialogue on the 2013 Budget without answering the technical analysis that the CES economists had conducted. This is not a dialogue,” they said. And they added that: “…the negotiating team did not take into account the fact that 2012 constituted a year in which public spending went overboard. They did not take into account the fact that we are in a critical situation and that by not continuing with a high rate of spending we are going to get out of this situation.”