Herrera Industries Association (AIEH) president Victor Castro is calling for improved efficiency in government spending. He said that the government could increase the tax burden without creating new taxes or increasing the rates of those already in place by increasing efficiency in public spending, as reported in El Caribe. Castro said this would enable a move away from the present model in which few pay a lot and many pay very little, which affects business in the Dominican Republic. He said there is a need to move towards more quality in public spending and less wasteful spending. He expressed his disapproval of the postponement of the integrated reform pact to after 2016, saying it was a bad sign for the short-term future of the economy.
He was responding to statements by the Administrative Minister of the Presidency Jose Ramon Peralta who said last week that the government would not carry out fiscal reform during this term. But he would be agreeing with him if by his statement he means that the productive sectors cannot bear more taxation. He says a reform that simplifies the system, promotes fiscal equity, eliminates distortions, promotes production, jobs and attacks tax evasion should be considered.
Castro said that if the country does not take on the immediate challenge of a comprehensive tax reform, economic growth would continue to depend on the government taking on more debt, a high-risk trend that has been flagged up by the visiting mission from the International Monetary Fund (IMF).
During the past five years (2009-2013) the public debt increased from US$13.25 billion to US$23.20 billion, and compared to GDP it grew from 28.4% to 38.5%. This is up from US$3.6 billion in 2000.
The business sector has called for the government to fulfill its commitment to carry out the comprehensive taxation pact under the umbrella of the Economic and Social Council (CES) as ordered in the National Development Strategy Law.
“The time is now; taxation patches are consumed quickly and we get back to the same place: the decision whether to raise or create new taxes to fill financial holes,” he said.
See more at: www.elcaribe.com.do/2014/03/10/aeih-dice-pueden-subir-ingresos-sin-crear-mas-impuestos