He said that reforms must be made to increase income levels to boost public spending.
In the last five years, the Dominican economy has done very well, as the reduction in social inequality has doubled.
In addition, in the last 20 years the country has had a growth, which Luis Alberto Rodriguezformer Vice Minister of Finance in Colombia, defined the figure of more than 5 percent as miraculous. But the economist points out that the Dominican Republic faces the challenge of increasing tax revenues to lower the level of public debt.
According to Rodríguez, the tax reform should focus on broadening the ITBIS base and simplifying and making the simple tax system more attractive to incorporate more micro and small businesses.
He stressed that reforms must be made to maintain or increase income levels to boost public spending and make it more efficient and transparent, with resources to pay the debt.
He indicated that there are very clear pending tasks for the country, which the International Monetary Fund (IMF) always highlights in each of its evaluation visits to comply with article four of the agreement.
He highlighted the positive aspect of the country’s successful approval of a fiscal responsibility law, which allows for a debt anchor, debt expectations and clear fiscal rules.
“I think that this will be very positive. It will lead to a jump in foreign and local investment, because they will be able to invest and borrow at better rates because there is fiscal and economic certainty. They can take long-term risks or carry out projects that require a larger investment,” he said.
Rodríguez spoke with HOY journalists about topics such as tax reforms in Latin America, medium-term fiscal frameworks in Latin America and the Caribbean, taxes during the pandemic and post-pandemic, the international economic situation, and the fiscal challenges facing the Dominican Republic.
Rodríguez is in the country invited by the Atlantic Council, a think tank in Washington, United States, and the Association of Industries of the country (AIRD), where he is holding talks with economic and university stakeholders.
The economist said that the ITBIS collection in the country has room to grow, which is almost a third of the collections, but almost half of it is not collected. Meanwhile, tax expenditure, what is not collected due to exemptions, is high and should be reviewed.
He also called for broadening the taxpayer base and for the informal economy, which accounts for half of the market, to become more formal.
To this end, he highlighted the importance of the single tax, a tool that has helped other Latin American countries in this regard. He stressed that a proposal that the country should study is also to expand the simplified tax regime so that more independent entrepreneurs and small businesses can join.
