Dominican Republic highlights progress in the face of inequality but urges reform

In addition, in the last twenty years, the country has grown by more than 5 percent, which Luis Alberto Rodríguez, former deputy minister of finance in Colombia, defined as miraculous. However, the economist highlights that the Dominican Republic faces the challenge of increasing tax revenues to lower public debt.

In Rodríguez’s opinion, the tax reform should focus on broadening the base of the ITBIS and simplifying and making the simple taxation system more attractive to incorporate more micro and small enterprises.

He stressed that reforms must be made to maintain or increase income levels to potential public spending and that it is more efficient and transparent and has the resources to pay the debt.

He indicated that the country has obvious pending tasks, which the International Monetary Fund (IMF) always highlights in each evaluation visit to comply with Article Four of the agreement.

He highlighted the country’s positive approval of a fiscal responsibility law, which allows for a debt anchor, debt expectations, and clear budgetary rules.

“I think that is going to be very positive. It will make a leap in foreign and local investment, because they will be able to invest and they will be able to borrow with 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 and after the pandemic, the international economic situation, and budgetary challenges in the DR.

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 holds dialogue with economic and university actors.

The economist said that the country’s ITBIS collection has room to grow. Although almost a third of the collections are collected, nearly half are not. Meanwhile, tax spending, which is not collected due to exemptions, is high and must be reviewed.

He also called for broadening the taxpayer base and for the informal economy, which is half of the market, to be more formalized.

For this objective, he highlighted the importance of the monotax, a tool that has helped other Latin American countries in this regard. He stressed that a proposal that the government should study is also to expand the simplified tax regime so that more independent entrepreneurs and small companies are integrated.