In the words of Minister of FinanceJosé Manuel -Jochi- Vicente, the government has a proposal for tax reform quite complete in which it proposes to eliminate some incentives, balance the payment scale of the taxesleading consumers, industries, companies and special sectors to collaborate with the more than 110,000 million pesos that the government requires to improve its finances.
He Minister of Finance made a detailed presentation at the monthly luncheon of the American Chamber of Commerce of the Dominican Republic (Amchamdr) under the theme: “Fiscal Situation of the Dominican Republic”, where he assured the businessmen that the reform to increase income has an aggressive plan against the tax evasion.
In this regard, he said that the public sector, the private sector, consumers and other sectors and institutions must do their part to achieve changes in public finances. “Here even the churches have to contribute.”
The official indicated that they need to increase capital spending from 2.7% of the gross domestic product (GDP) to 5%, for which he said that resources are needed, so the fiscal proposal includes analyzing the exemptions“I came across exceptions that I didn’t even know existed,” he said.
In fact, he pointed out that the Dominican Republic is the third country with the public spending lower of the Latin American and Caribbean region. Primary expenditure currently represents 19.3% of GDP and the regional average is 27.8%.
“To respond appropriately to the demands of the population related to the basic servicessubstantial increases are required in the public spendingas the needs of the population have grown and require investments significant to ensure a decent standard of living and improve the quality of services. However, it is important that these increases in the public spending are not financed through the indebtedness since this compromises the economic stability “future”.
Jochi Vicente presented the perspectives on the current fiscal context and the principles that support the proposal for tax reform comprehensive that is being worked on by the government, indicating that to address the deficit and the decline investment public that has been maintained for years, governments have had to go into debt, increasing the debtespecially during the response to COVID-19.
The head of the Treasury explained that, given this scenario, it is necessary increase the available resources so that the State can produce the public goods and services that the country demands and stay on the path of sustainability.
He also stressed that the tax reform would be guided by four key principles:
- Participation of all sectors of society, assuming a commitment to reform.
- Protect the most vulnerable population by increasing social assistance and subsidies.
- Work to achieve tax equity so that all companies compete on a level playing field.
- Frontal attack plan against tax evasion and avoidance with a reinforcement of the tax administration.
Vicente assured that the reform project will allow the State to significantly increase the investment in the basic problems of Dominicans, such as health, security and infrastructures. As well as in the electrical sector.
Recapitalize the Central Bank
Another essential issue for the Government is the recapitalization of the Central BankVicente recalled that the International Monetary Fund (IMF) recommended that the country increase the percentage of the gross domestic product (GDP) allocated to the economic strengthening of the country’s monetary body.
“We are taking the necessary step to overcome obstacles that have slowed down our developmentand that will now allow us to carry out the investments necessary for a safer, fairer, healthier Dominican Republic with greater access to opportunities,” he said at the end of his participation.
