The other necessary pact

El Dia’s editorial today, Thursday 11 December 2014 urges the signing of the Fiscal Pact to reduce distortions in the taxation and government spending.

For starters, there are many laws that allocate percentages of the budget for 140% of the total of the budget. “This is an absurd situation that needs to be corrected,” writes the editorialist.

The writer continues by pointing out that many tax exemptions need to be reviewed to determine their convenience or application to the country’s overall development.

The editorialist also observes that at 14% the formal tax pressure is low, while noting that the pressure on the few that actually pay taxes is a much heavier burden.

The editorialist goes on to say that the Dominican Republic needs to decide if it will continue to give priority to taxing consumption or earnings or luxury. At the same time it has to make government spending of the funds assigned to national goals more transparent.

The column ends with the statement that one cannot talk about Fiscal Pact without working at the same time on the signing of the Electricity Pact, because the latter is a burden of more than US$1 billion in annual subsidies. “The cards need to be placed on the table for a comprehensive fiscal reform that contributes to our progress,” concludes the editorialist.