The Minister of Economy, Planning and Development, Miguel Ceara Hatton, reported today that, given the rejection of a tax reform, the government will continue to rationalize spending as much as possible for the execution of priority works.
In this regard, he reported that, in the first year of the government of President Luis Abinader, around 130 billion pesos were reallocated to achieve better spending on budget items.
“Since we came to the government it has been a consistent line of improving the quality of spending, that does not mean spending less, but spending better,” said the official.
Referring to the president’s speech broadcast last Wednesday night by a radio, television and social networks, he said that President Luis Abinader listened to the voice of the population, ruling out the application of a tax reform at this time.
However, Ceara Hatton clarified that the country is going to pay a cost because with the current collection levels it is not enough to do the works that citizens need and demand in terms of infrastructure, health, education, among others.
“But this postponement has a cost and the President has assumed that responsibility,” said the official when interviewed on the program El Despertador that is broadcast by Color Vision.
Regarding the management of the Public Administration, Miguel Ceara Hatton, said that “there is a structural problem in the Dominican Republic’s tax system that at some point will have to be resolved,” he said.
The priorities
In that sense, he announced that the Government will set for next year what are the priorities that the country demands, such as, for example, citizen security, and simultaneously proceed to improve the quality of spending.
The official recalled that the Dominican Republic is among the nations that have the lowest tax pressure.
The Minister of Economy explained that, if we compare ourselves with 192 countries in the world, 70% have a tax burden greater than 20%, while, in Latin America, the average is 27%, and in the Dominican Republic it is 14.1 %.
“Average spending in the country is 17% of GDP, which means that 90% of the world’s countries have higher spending, that is, we are well below international standards,” he said.
He recalled that the health crisis that impacted in 2020, cost the country 23% of gross domestic product (GDP), among the income that did not enter the economy, due to the pandemic, plus additional expenses, had a cost of 18 one thousand 460 million dollars.
“The other important element of this crisis is that it is global, in 2020 84% of the world’s countries registered negative growth, a figure that had not been seen in centuries,” he explained.
“We are talking about a world situation, and to that situation it is necessary to respond, because since March of this year the Dominican economy began to rebound, and the projection for the end of the year is a minimum growth of 10%,” he revealed.
He cited that the United States had a deficit in 2020 of 15% of its GDP, while Germany registered 5%.
Budget Modification
The Minister of Economy, Planning and Development anticipated that the National Budget and General Law of Public Revenues and Expenditures of 2022, will be modified to establish priorities regarding the projected spending in the construction of works of collective interest.
He stated that there is a structural problem in the country “and we have been accumulating a deficit of difference between income and expenses, equivalent to between 3 and 4 percentage points.”
He specified that at this time there are no conditions to carry out a tax reform, although technically it is needed and will be necessary at some point.
“We are going to end a year with a lot of growth, recovering employment levels and with a low fiscal deficit,” said Economy Minister Miguel Ceara Hatton.
