2000News

Mejia Signs "Paquetazo" Into Law; Sends Modifications to Congress

President Hipolito Mejia wasted no time in promulgating his fiscal reform package. The Customs Reform Law (146-00) and the Tax Reform Law (147-00) went into effect at midnight, having only passed its final legislative hurdle just over 36 hours earlier. The law provides a simplified and reduced scale of duties of 0%, 3%, 8%, 14% and a maximum of 20% on imported goods, with certain vital medicines, computers, and research equipment exempted. The Tax law provides for the monthly collection of tax pre-payments of 1.5% of gross sales by businesses, and an increase from 8% to 12% on goods and services. The 12% tax is also extended for the first time to professional services. In addition, the law imposes new taxes on tobacco and alcohol. Mejia was also quick to comply with the terms of the "gentleman’s agreement," signed by him, former President Joaquin Balaguer, and PRD Party head Hatuey De Camps, which unlocked the PRSC Party vote in favor of the "paquetazo" in the Chamber of Deputies. The agreement called for a reduction from 12% to 6% on publicity and the elimination of the prohibition on the importation of motor vehicles more than five years old. Those two modifications were included in a bill Mejia forwarded to Congress yesterday. The bill also included a miscellany of modifications to the legislation approved two days previously. Among these are; removal of a 5% hotel room tax, cancellation of a new tax on air line tickets, elimination of the duty on evaporated milk, elimination of the 0% duty on imported textiles, exemption of the tax on lottery winnings, and elimination of taxes on the real property of disabled persons.