Diario Libre reports today that the government and business sector have differing opinions over the penalization of the productive sector by more taxes. At the start of the Mejia government, a fiscal reform was carried out that virtually doubled taxation on the private sector. Subsequent additional taxes have since been levied on businesses. According to a report in the government-intervened Listin Diario, the government hopes to increase the ITBIS sales tax, in addition to the 5% tax on exports. This is in addition to the 4.75% surcharge on exchange transactions that was increased to 10%, and the new 2% on imports, among other new fiscal measures needed to bolster government finances.
Even sectors within the PRD believe the government should make more efficient use of its present revenues, as Miguelina Ortiz, Tourism Minister and wife of Presidential pre-candidate Rafael Subervi, said on the Julio Hazim TV talk show this morning. But Technical Secretary of the Presidency Carlos Despradel insists the government needs the new taxes to balance its budget and meet the numbers required by the International Monetary Fund. Despradel says the government must have more funds to recuperate from salvaging the collapsed banks and the buyback of the power distribution companies. While the business sector wants the government to sign with the IMF, its spokespeople feel the industry can bear no further penalties and the government should instead reduce its own superfluous spending. The business sector is already cringing under the rampant inflation, rising power costs, decreased sales, and already high taxes. The IMF suspended its agreement with the Dominican government, after the Mejia administration performed a surprise buyback of the Union Fenosa power distribution companies in the DR. Elena Viyella de Paliza, president of the National Council of Business (CONEP), the largest business organization, urged the government to seek balance in its public finances. She criticized the takeover of the power distribution companies and the intromission of politics in the government’s economic decision-making. She opposed the government’s decision to push the 5% tax on exports through Congress at a time when the country needs to generate hard currency more than ever. El Caribe writes today that the government will need to spend around 60% of its funds (or RD$64 billion) on the burgeoning foreign debt and government wages next year.