The economist Guillermo Caram says this Monday that after President Luis Abinader’s decision to withdraw the Draft Tax Modernization Law from Congress, there is no other way to address it other than via spending.
«The RD$122mM that the government intended to obtain with the impositions contained in the “modernization” project are equivalent to 9% of the current expenses consolidated estimates in the 2025 budget at RD$ 1,329 MM,” he emphasized.
It also understands that if this measure is not taken, “capital spending that increases the nation’s productive assets would have to be reduced, already reduced by 88% from what was postulated in 2024, or the debt, already high in the 2025 budget, would have to be increased.” : US$5,850 million»
Also with the reduction of bills “It would give the government moral authority to propose new impositions. “There is a lack of moral authority to propose new impositions in the face of excessive, superfluous and lacking priority expenses.”
«Reducing the expenses of the 2025 budget by that percentage would obtain the same fiscal result as if the withdrawn impositions had been approved. For this, adequate legal resources are available,” he added.
Damn recalled that “Article 44 of the organic budget law states that “The budgetary appropriations approved by the Congress of the Republic They constitute the maximum limit of expenditure, subject to the effective availability of the estimated income… In no case do they constitute a right acquired by the executing units of each public body…”.
“Article 46 further establishes that…”all public organizations must program the financial…execution of their budgets…which article 47 qualifies as a “cash budget,” he explained.
To reduce your budget, from current spending by 9% to any of the following these are the 15 possible options:
1. Freeze positions and salaries including complementary remuneration: on salaries, travel expenses, representation expenses, use of cards, use of vehicles, fuel, celebration of events in luxury hotels, reduction of advertising, invitation of artists to festive shows of the institutions , adhere to the law regarding the number of support staff of officials, etc.
2. Each institution must carry out, within a period of three months, the performance evaluation stipulated in Law 87-01 in order to arrange the permanence or dismissal of the staff.
3. Empower the heads of public entities to optionally establish the reduction of the working day to 4 days accompanied by a salary decrease of 9%, which means a salary increase of 11% for employees who take advantage of this provision.
4. Call on recipients of social subsidies to reformulate their request for subsidies upon express request in which they demonstrate their need according to a form that must be designed for this purpose to determine the amount required to cover their expenses.
5. Categorically prohibit the granting of subsidies and aid to people who receive monthly income greater than the amount of the family basket.
6. Grant subsidies directly to those subsidized, eliminating all types of intermediation.
7. Offer subsidy recipients the option of renouncing the aid received by accepting the offer of receiving an advance amount through PROMYPIME to establish a business or workshop
8. Require those decentralized organizations whose expenses are covered by 50% or more of the current transfers of the Budget, to submit to financial discipline to honor their autonomous nature; or otherwise, proceed to suspend said autonomy to be relocated to the most pertinent agency of the central government.
9. Require City Councils to strictly adhere to their expenses to the stipulations of law 176-07 of municipal organization regarding the proportion of the concepts of current expenditure vs. investment that they must fulfill. Order the LMD to withhold allocations to the municipality that does not comply with this provision until the situation is corrected.
10. Order LMD to deduct from the investments made by the government in favor of a specific municipality from the allocations that would correspond to said municipality.
11. Rigorously apply the allocation of funds to ISFL, subjecting them to its legal constitution, holding of assemblies, renewal of directors and presentation of audited financial statements.
12. Instruct DIGEPRES and the DGCP to improve the transparency of statistical information on government purchases that were classified under the nebulous heading of “others” highly susceptible to the commission of corrupt practices.
13. Eliminate allocations to political parties
14. Demand from electrical companies a cost reduction program within three months to reduce transfers of funds from the executive branch by 50%. This plan should contemplate everything from the elimination and merger of electrical companies to the privatization of their services following a regional and vertical integration scheme (generation and distribution) so that the collection of rates becomes carried out by the generators.
15. Explore non-fiscal solutions to government financing to the Central Bank’s quasi-fiscal deficit.
At the same time, the government could submit its “tax modernization” project to the ECONOMIC AND SOCIAL COUNCIL in accordance with proposals that we will submit in due course.
