The Senate will today study whether to proceed with the passage of the tax reform. Senate leader Andres Bautista announced yesterday they would pass the bill. The government is encouraging them to do so, alleging it needs the extra tax income to help pay for social and infrastructure spending regarding damages caused by the tropical storm Jeanne.
The issued over the 25% tax on future corn syrup imports that would have entered duty free under the FTA signed with the US continues to be debated in the Senate. A very strong local sugar lobby, championed by Central Romana, wants the surcharge to be included in the tax reform legislation. Central Romana has ties to sugar production in Florida through the Fanjul business group. Campos de Moya, the spokesman for the Vicini sugar producing group, argued that protection is needed in the face of a dwindling US sugar quota.
The surcharge under discussion would primarily impede soft drink bottlers from switching from local sugar inputs to the imported corn syrup. The sugar producers are in favour of the surcharge and argue that 200,000 jobs would be jeopardized if the corn syrup is not assessed. Those lobbying on behalf of the free zone manufacturers, however, say that the sugar industry barely employs 20,000 people (and many of these foreigners) and that 180,000 jobs of Dominicans are at stake, plus some 78 companies that have conditioned their entry to the effective date of the FTA with the US. The US Trade Representative Office has said imposing the tax will derail the DR portion of the DR-CAFTA free trade agreement.
Diario Libre reports that a letter dated 16 September from US Congressman Jerry Weller, a member of the Ways & Means Commission, urges President Leonel Fernandez to find mechanisms that will prevent any surcharge from being applied to corn syrup imports. He says that if the tax goes ahead, the US will proceed with the agreement with Central American nations, but will exclude the DR. US Ambassador Hans Hertell met with several senators yesterday. Anibal Garcia Duverge, the spokesman for the PRD block of senators (which encompasses all but two senators), said they had not been pressured by the US to eliminate the article on corn syrup in the tax reform.
William Malamud of the American Chamber of Commerce said that an alternate solution should have found to meet the interests of the sugar producers. He told El Caribe reporters that the provision to make the use of corn syrup more attractive to local soft drink and juice manufacturers would not take effect for another four years anyway.