The Dominican tax codes have been modified eight times since 1983, to change the VAT and to resolve crisis in the system. None of the modifications created a tax system that was fair and guaranteed funds for social investments. The government has announced that it will submit the new tax package to the Congress in August, and some sources told El Caribe that this may be the opportunity to do just this. Miguel Ceara Hatton, of the United Nations Development Program office said that “in the beginning, he who has the most, will pay the most as a proportion of their income…” Ceara Hatton said that a lot depends on what type of tax reform is presented, and it is possible that the authorities just continue applying “patches” on the current system. The IMF Letter of Intent sets out that the tax reform has to be “neutral” since it is not looking for new income, just to substitute tax sources for the estimated RD$22.0 billion that will be lost when the 13% exchange tax on imports as well as other import taxes are revoked wehn the DR-CAFTA goes into effect.
The last tax reform went into effect October 2004, and it aimed to collect some RD$19 billion by adding 4% to the VAT. As a result consumers now pay nearly a one-third tax on telephones and other communications, and on their restaurant tabs. In addition, the new taxes were an addition load on the dollarized prices of many articles that have yet to recover their place in the market. Like Ceara Hatton, both the Conep and the Asonahores have used the term “integral” as part of their thinking on the new taxes. To their way of thinking, everything should pay tax, including those items of basic foodstuffs like plantains, rice and beans as well as medicines. The suggestion from the Conep people as well as the hotel and restaurant folks gathered under Asonahores, is that these basic items should be taxed at a lower, 8%, rate, just half of the current VAT tax. All of the parties were consistent is saying that the agency that collects the taxes has to become more efficient in order to reduce tax evaders.