The Listin Diario, the government-intervened paper, reports that the PRD government will hand the PLD party representatives their proposals for the required tax reform stipulated in the IMF StandBy Agreement. For the past few weeks, President Mejia has said he would not do anything with the tax proposals, since the new, incoming government would have to deal with them.
The proposals will include the projected income that should result from their implementation, as well as tax hikes, the expansion of tax bases, the elimination of some taxes and the addition of others. The proposals will include commentaries by technicians contracted to draw up the reform package.
Official sources report that the transition commissions named by President Mejia and President-elect Fernandez will be meeting for a second time this Wednesday at 11am at the Presidential Palace.
Finance Minister Rafael Calderon has prepared several scenarios on the financial situation, as well as possible modifications. The Ministry of Finance and the Internal Revenue Office (DGII) will hold a two-day seminar to work out an official proposal for tax reform, and this will, in turn, be subject to public debate. The source also said that one of the hot topics of debate will be the increase in the VAT tax (ITBIS) from 12% currently to 15% or 16%.
Frederic Emam Zade, one of the key economists at the Fundacion Global Democracia y Desarrollo, has proposed reducing the ITBIS tax to 10% and extending it across the board. His reasoning is that by reducing taxes the government will collect more revenues.