President Luis Abinader announced to the country on Wednesday night that his government will not submit a tax reform or increase taxes. He emphasized that his only priority is “to consolidate the economic recovery.”
In a speech, he stressed that the government is focusing its efforts on reducing expenses and trying to recover the funds stolen from the state patrimony. Regarding the reduction of expenses, he said that his administration has saved RD $ 27,000 million between January and September 2021.
“It is not about spending more, you have to spend better. Only in what is necessary ”, he highlighted.
Next, the full speech of Luis Abinader:
PRESIDENT’S WORDS
TAX POLICY ISSUES
Dominicans and Dominicans,
When we came to the government a little over a year ago, we encountered a very complex situation. The major reforms that our country needed and the difficult situation the world was going through made our work focus on overcoming the emergency without damaging or compromising the future.
The COVID19 pandemic had impacted not only on health and our way of life, but on the Dominican economy, affecting employment, activity and the foundations of our own productive structure.
Our country and the world were experiencing an economic crisis of enormous magnitude that we have had to face with courageous policies and with a long-term vision.
Today the situation is clearly improving. Our vaccination is one of the best in the world and our fatality is one of the lowest. In addition, our economy is experiencing one of the highest growth rates internationally and the level of pre-covid jobs has already recovered.
Friends and friends,
The Dominican Republic has long debated the need for tax reform. For years, multiple tax increases have been approved, which were called “tax patches”:
In 2005, a 13% tax on hydrocarbons was established, which in 2006 was increased to 16%, and the ITBIS was increased from 12 to 16%
In 2011 the income tax for legal persons was raised to 27%.
In 2012 the ITBIS went from 16 to 18% recording goods that until then were exempt such as edible oil, sugar, cocoa and coffee.
During these days we have heard a lot about taxes again, but little has been said about the other side of the coin of fiscal policy: expenses.
And this is where the government is focusing its efforts at the moment.
From the beginning, we were absolutely committed to the quality of spending, the prudent and transparent management of public funds, and the recovery of assets stolen from the State’s patrimony.
Public funds belong to all Dominicans. And I have promised before you to administer them correctly and to defend them tooth and nail, fighting waste and fighting against those who want to lay down the clutches of corruption.
Between January and September 2021 we have reduced expenses by 255% compared to the same period of the previous year, in all items that do not directly affect the well-being of Dominicans, achieving savings of more than 27 billion pesos.
Among the most significant, I must point out a reduction in advertising and propaganda spending of 70%, falling from more than 5,490 million pesos during the previous period to 1,612 million in this one.
In the discretionary use items, from January to September 2020, 4,437 million were spent, while in the same period under this government, only 161 million pesos were executed. A reduction of 2,648%.
Spending on food and beverage diets has been reduced by 143%. Within the country, the reduction in allowances reached 2.136% compared to 2020, and in travel allowances for people with diplomatic and consular work the decrease reaches 87%.
In the purchase of furniture and equipment for government offices, the execution in 2021 was 479% less compared to 2020 and in perishable materials, the reductions exceed 1,500%.
In addition to this, we have reduced structures, eliminated entities and merged others. An example of this is the office of the First Lady, Procomunidad, the Office of Supervisory Engineers of Works of the State OISOE, the State Sugar Council; the CDEEE; FONPER, or the merger of DIAPE and DICOM among others, and we will continue in this same line to improve the quality of spending.
With a more efficient management of the administration we have achieved that, for example, entities such as PROMESE acquired more drugs with the same budget; that the economic canteens and the social plan have increased their rations and aid with the same resources by 30%, or that public companies such as Refidomsa or the Reserve Bank have had more benefits.
It is not about spending more, you have to spend better. Only in what is necessary. Only in what improves the quality of life of Dominicans. And that is why each peso of the public budget now has the President’s magnifying glass on.
Ladies and Gentlemen,
The institutional reform agenda that we have proposed on almost all fronts and a true rationalization of public spending, to make it efficient and productive, have already begun to reactivate our economy and provide us with sufficient means to balance our accounts without touching the pockets of citizens.
The Central Bank reported a few days ago that the Dominican Republic had a growth of 12.7% of GDP from January to September compared to the previous year. We have already recovered pre-pandemic employment levels, sectors such as Free Zones or Tourism are capable of breaking records in the coming months and we are the country that generates the most confidence for national and foreign private investment in the entire Caribbean region.
This government is firm. We are not afraid to row against the current if we know that we are going in the right direction, as with the proposal for a third dose of the vaccine, which in its day was controversial and today has proven successful, but we also listen to our people and we are aware that today With an exponential increase in the international prices of oil, basic food products or raw materials for fertilizers, with the impact that this has on domestic economies, it is not the time to ask Dominicans for more efforts. It is time to be close to people.
That is why we are not going to increase the tax. And today I want to announce that we will not submit any tax reform. Now our only priority is to consolidate the economic recovery.
Ladies and Gentlemen
The possibilities of the Dominican Republic are enormous, but I need all of you with me to move this country forward. We have a huge collective challenge before us and I am willing to work shoulder to shoulder with each Dominican to achieve the objectives that as a country we have set ourselves: A nation in the process of development, with a productive public investment that generates economic growth that reaches to all and with an improvement of the network of public services.
There is the goal. And here is my daily work and my sacred commitment to achieve it. Today I ask everyone to join me.
The only reform that we are going to undertake now is to continue betting on growth and investment so that the benefits reach all Dominicans.
Thank you very much and may God continue to bless the Dominican Republic.
