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Santo Domingo– The president of the National Union of Businessmen warns the authorities that the tax reforms they plan to implement must be aimed at protecting the economic, social and political stability that the Dominican Republic has enjoyed for decades.
Leonel Castellanos Duarte insists that the Dominican Republic as a country has conditions that must be saved and taken care of to avoid situations that occurred in the past.
Castellanos Duarte acknowledged that the expansion of the tax base cannot be postponed because it would be unfair to continue to penalize those who currently pay taxes, but he said it must take into account the poorest groups of the population.
The business leader, who was interviewed by Héctor Herrera Cabral on the D’AGENDA show, which airs every Sunday on Telesistema 11 and TV Quisqueya America, recalled that as a country we must look at ourselves in light of the experience of the tax reform that was implemented in 1984.
He said he was sure that President Louis Abinader was well aware of this to prevent a situation very similar to that of the aforementioned date, when an agreement was signed with the IMF that imposed a series of conditions that were unsustainable for the population.
“There is one condition that we as a country must save and take care of to avoid falling into the past, and that is the tax reform that must take into account the social, economic and political aspects, we have these three aspects and we must protect their stable conditions because this is what distinguishes us from other countries in Latin America,” insisted the president of the National Union of Businessmen.
Leonel Castellanos gave the example that the Dominican Republic had just gone through an electoral process without any trauma, which showed the maturity of Dominican society.
“So, within the framework of tax reform, we must try to connect these three elements in tandem, because we want a country that continues to grow, we must define the size of the economy that we want and eliminate the many distortions that exist in the tax system,” said the businessman.
He used the example of sausages, where everyone agreed that salami consumed by the most disadvantaged classes should not be taxed, but other types of delicacies widely consumed by the upper class should be taxed.
“All these programs must be reviewed product by product to expand the Itbis base, but those elements of upper class consumption, as long as they do not affect the basic basket of the poorest, must be included in the reform. . ” , precise.
The business leader said one issue that cannot be overlooked in the reforms is the efficiency of public spending, although he realizes that the government needs more resources to meet the country’s different needs.
The UNE president said one of the issues that must be addressed is tax evasion, which exceeds 40% in Iterbis and more than 60% in income tax.
Leonel Castellano recommends review of tax exemption rules to respect vested rights
Leonel Castellanos Duarte, president of the National Union of Entrepreneurs, favors reviewing tax exemptions in the context of tax reform, as long as vested rights are respected.
“There are sectors that have tax exemptions and that must be reviewed, always respecting their vested rights because there is a legal framework that must be respected, but there are sectors here that are sustainable and that can justify their growth based on the incentives they have received,” explained Castellanos Duarte in an interview with the D’AGENDA program.
He insisted that for the institution he chairs, all of these must be reviewed and incentives and tax exemptions formulated based on the results and these formulated within the stipulated time.
“We cannot continue to provide incentives to industries that are mature and can grow sustainably on their own,” he warned.
Castellanos Duarte said that the Tourism Promotion Council (Confotur) must be reviewed, respecting the vested rights that we have spoken about before, but sustainability must be reviewed because it is other qualities, and not necessarily incentives, that make tourism successful. .
“It’s not just the incentive, there are other factors involved, such as the capabilities, experience and training that Dominicans have in the region, and for investors in the tourism industry there are many things that they very much consider going elsewhere because we already know how to market the Dominican Republic to the world,” he stressed.
The business leader gave the example that houses in tourism developments do not pay real estate tax (IPIS), and someone who invests $1 million is not poor, so there is no explanation why this tax can be paid tax-free, and the same thing happens with the license plate tax, as high-end vehicles cannot pay the same fees as economy class vehicles.
Those who win the EDES tender are warned to invest their resources, not the state’s.
Businessman Leonel Castellano has warned that the companies that win the tender for the management of the electricity distributor must take into account that the investments that must be made must come from their pockets and not from the resources of the Dominican government.
“We agree with the participation of the private sector in the management of distributors, but we must clarify that one thing is privatization, which is when you sell products to the private sector, and another thing is when you issue a tender to manage these companies, and we in the management,” the president of the National Union of Businessmen clarified, adding that in this tender the terms of the conditions state that it is the private sector that invests in the distributors, not the government.
Castellano Duarte said the idea is to eliminate state subsidies, which cost 86 billion pesos this year alone and will increase even more in the 2025 budget.
“So if we have a plan based on private sector investment in the distribution network, through a plan established in a transparent way, the state will eliminate this subsidy,” said Lionel Castellano in an interview with the show Agenda.
The business leader emphatically warned that the state cannot continue to invest in the network so that others can manage it, this is not business because the government will continue to face the same problems.
“They will continue to spend money, give subsidies and let the other side get the benefits of the state investment. No, it is like renting a property for 20 or 30 years. This must be stipulated by the responsible organization, but if we look for a formula, the private sector is the one that invests through the administrative process of the electricity distributor,” he said.
Castellano said that through this plan, the private sector manages these companies but takes the risk if there are losses and gets the profits if there are profits, and from then on energy theft will end and everyone will pay for the service.
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