The Minister of Finance and Economy, Magin Diazproposed that a partial salary indexation that “does not put into play” the public financesopening a gap in a public debate in which the Government opposes changing its freeze in the budget law, a position defended even by its predecessor, José Manuel –Jochi– Vicente.
When asked if the exempt minimum wage of the income tax (ISR) should be adjusted annually for inflation, Díaz – also former head of Internal Revenue – said yesterday that he would agree with a partial measurement that does not compromise the stability of the treasury. “That’s the important thing,” he remarked.
He recalled that in 2017the year in which the measure was frozen for the first time through the budget lawonly around 10% of employees paid this tax, so the decision was made mainly to expand the tax base.
Without “economic logic“
For Vicente – at the head of the Treasury until July of this year – the Dominican Republic is “particularly generous” with the exempt minimum wage of paying the ISR when compared to its peers in the region.
In an analysis shared on his social networks, he pointed out that 78% of social workers do not pay this tax, because their salaries are below the exempt limit to pay it.
“When an exemption covers almost the entire wage bill, it has no economic logic continue expanding it. Adjusting the brackets for inflation would only maintain – or expand – the number of exempt people, further reducing the tax base and, therefore, the collection,” he pointed out.
Both Díaz and Vicente agreed that whether or not to index salaries depends, in any case, on a tax reform.
“We cannot focus now on isolated measures,” said Díaz, as he warned that a total and immediate indexation could imply a significant loss of income for the Government.
He indicated that, for the moment, he is in a phase of listening to more than 50 unions and productive sectors on the subject.
Discussion topic
In a context in which a higher cost of livingthe fact of whether it should be frozen or not salary indexation It is a topic that has generated debate.
Last week, the President Luis Abinader warned that, although it is true that the provision of the Tax Code is “fair and necessary”, it would imply less income to the treasury, which would force a reduction in funds allocated to sensitive areas due to their social impact.
“If we do it, we must say who we take away the resources: to health oa education“?” questioned the president amid accusations from the opposition.
The senator for Fuerza del Pueblo, Omar Fernández, claimed his application due to the high costs of basic basket family, while Guarocuya Felixmember of the Political Committee of the PLD –Government that implemented this measure in the 2017– assured that restoring indexation constitutes “a responsible response to a profoundly transformed economic reality.”
