The Association of Wine and Liquor Agents yesterday condemned proposals by the Fernández government to raise the Selective Consumption Tax (ISC) as part of an effort to offset expected losses in government revenue due to tariff cuts. Last week the Government sent to Congress proposals to reform the DR’s tariff system and to compensate for the projected resulting revenue loss by raising the Transfer Tax on Industrial Goods and Services (ITBIS), which is paid on a wide range of goods and services, and raising the ISC, which affects beer, wine, liquor and tobacco products. The Association said that the government’s plan would raise the average price of wine and liquor by 12-13% in 1999, and in the process seriously hurt sales. The group also suggested that the tax hike would simply give incentive to contraband operations. Separately the President of Cervecería Nacional Dominicana (the company best know for its Presidente beer), Rafael Menicucci, expressed yesterday his company’s opposition to the proposal to increase the ISC on alcoholic beverages. While his company supported tariff reform, he wondered aloud why one sector (alcoholic beverages) must shoulder so much of the bill (via the ISC) for a reform that will benefit a wide range of Dominican industry. He said that the tobacco and alcoholic beverage industries feel that the domestic tax burden for the tariff reforms should be more evenly distributed among sectors of production, and he proposed broadening the base of ITBIS as one way to do so. The President of the Senate, Ramón Albuquerque, told Hoy and El Nacional newspapers yesterday that he believes that raising ITBIS is not necessary in order to offset the revenue loss from tariff cuts. He suggested that most of the revenues could be recovered by better enforcement (making certain everyone who owes pays and pay exactly what they owe) and by expanding the base of the ITBIS. Many important sectors are currently excluded from application of ITBIS, he pointed out. He gave the example of publicity, a sector involving some RD$7.5 billion annually in the DR. Apply ITBIS to this sector alone and the government could raise RD$800 million.
