Finance Minister Vicente Bengoa does not agree that the Dominican government should increase taxation to a level of 4% of the Gross Domestic Product as suggested by Jesus Seade, senior advisor in the IMF’s Fiscal Affairs Department, during a conference in Costa Rica on the fiscal challenges ahead in Latin America. He said that the IMF establishes that the fiscal reform would be fundamentally compensatory, oriented to adjust the government revenue level once the free trade agreement with the US goes into effect. Once the DR-CAFTA is in effect, the state will have to rescind from the exchange surcharge tax, the 0.015% on checks, and import tariffs, among other revenues.
As reported in Hoy, Bengoa highlighted that the forthcoming fiscal reform needs to be oriented to increase internal and external competitiveness of productive sectors, to avoid the cascading effect the exchange surcharge and other taxes have on the price of goods at present.
The president of the Association of Industries, Yandra Portela urged that the government act with caution so as to not further decrease the local productive sector’s competitiveness. She said it was important that the level of local taxes on production is equal to those affecting production in countries that compete with us in order to avoid the collapse of Dominican industry.
Richard Lueje, of the National Association of Young Entreprneurs (ANJE) rejected any increase in taxes. “If tax rates are increased, then we will be just charging more to those who always pay and we will have become less competitive,” he stated.
The increase in taxes was also opposed by members of the Senate.
The DR stand-by arrangement with the IMF came into effect on 31 January 2005.