Just hours after its approval, Abinader enacted the tax reform law.
Last Thursday, June 11, through two separate meetings with the media, the Minister of Finance and Economy, Magín Díaz, presented for the first time his so-called “anti-crisis plan”, which consisted of a reform to the tax policy as a way to combat the onslaught of the crisis produced by the war conflict between Iran and the United States.
Just one week later, after being urgently approved in both legislative chambers of the National Congress, the so-called Law of Measures for economic growth, tax simplification, and mitigation of the international crisis was enacted by the Executive Branch.
Law 30-26 was approved in the Chamber of Deputies in two consecutive readings on Thursday afternoon and immediately sent to the National Palace. President Luis Abinader signed the new legislation after he participated in the inauguration of a new park on the Malecón in the National District.
“Given an international context marked by economic and financial uncertainty, it is necessary to adopt measures aimed at strengthening fiscal discipline, the sustainability of public finances and predictability in economic management, to strengthen the State’s capacity to respond efficiently and promptly to the changes and challenges of the national and international economic environment,” reads the press release sent from the National Palace to formalize the promulgation of the new tax reform.
The new legislation seeks to add approximately RD$50 billion to the General State Budget by increasing the tax burden on various sectors of society and was presented as a solution to withstand the effects of the crisis.
Just six days in the National Congress
With its approval in the Lower House, the anti-crisis plan culminated its journey of just six days within the National Congress.
The bill was introduced through the Senate of the Republic on Friday morning, so the president of the Upper House, Ricardo de los Santos, appointed a bicameral commission led by Senator Pedro Catrain, along with ten other senators.
Last Wednesday, just five days after receiving the bill, the senators approved it urgently with a series of modifications to articles 28, 37, and 38, which establish the tax on lottery outlets and exempt fire trucks and ambulances from tariffs, among other things. The legislative proposal will now go to the Chamber of Deputies, which will, after reading and reviewing it, decide whether to approve it.
The next day, the deputies used the emergency procedure to approve the new law on consecutive readings.
“How great it would have been if the Social Security Law, which is 14 years overdue, had been approved in a (similar) period or if we had dealt with the Labor Code using this same process,” lamented Rafael Castillo, spokesperson for the People’s Force (FP) in that legislative body, moments before the vote.
During Wednesday’s session, members of the Dominican Liberation Party (PLD) and FP blocs presented more than 10 proposed amendments. However, Pacheco, speaking on behalf of the Modern Revolutionary Party (PRM) deputies and their allies, explained that they voted in favor of the opposition’s motions “because this means the bill will return to the Senate.”
Christmas salary tax
The suggestions presented by the non-government legislators sought to address “some aspects” of the legislative document titled Measures for Economic Growth, Tax Simplification, and Mitigation of the International Crisis. This was stated by Representative Carlos de Pérez, who asserted that the Christmas bonus, “the 13th salary,” would be subject to increased taxes.
Furthermore, he stated that Article 50 of the initiative establishes an increase of two pesos per gallon of fuel purchased within the national territory, “in addition to the tariffs and amounts currently paid.”
“If we look at it closely, this reform will end up affecting the table and the pockets of every Dominican because it taxes fuel, which makes everything more expensive,” he explained.
He also stated that liquefied petroleum gas will be further burdened by a per-metric-ton cost increase of 174.
“Which means that turning on the stove at home to cook and eat will cost a little more,” he said from his seat in the chamber.
De Pérez questioned why neither the Government nor the legislators of the PRM consider it necessary to exempt rice, beans, eggs, and chickens from the Transfer Tax and Industrial Goods (ITBIS) in article 38.
“I think an exception should also be included because that is the flag of the Dominicans,” he said.
The FP caucus reiterated its request, led for months by Senator Omar Fernández, to fully adjust, “not partially”, the amount of Income Tax (ISR) to the annual inflation that the country currently has.
Salaries are not indexed. We acknowledge an improvement over today, raising it from 34,000 to 39,000. If the cause the Government announced was the war in the Middle East and that disappeared, the most decent thing would have been for the project to have disappeared as well,” De Pérez stated.
While some members of the PLD party supported some of the measures presented in the legislative bill, describing them as “positive measures.”
“Such as the definitive elimination of the advance payment for micro-enterprises, the 3% reduction in inheritance taxes between father and son, and the special deduction for educational expenses for families caring for people with disabilities,” said Representative Ydenia Doñé.
