UASD School of Economics announces they will present a tax reform proposal – El Nuevo Diario (Dominican Republic)

Santo Domingo, El Nova Diary – Antonio Ciriaco Cruz, Dean of the Faculty of Economics and Social Sciences of the Autonomous University of Santo Domingo (UASD), has detailed the main points in the tax reform proposal they will present for the country.

The economist explained that the proposal has several parts: one is progressive, which will make those who have the most pay more; another seeks to reduce the burden on the middle class and another triggers formalization.

“We are preparing and finalizing a proposal with some guidelines. For example, the reform must have a gradual component and must be of the type of taxes where there is tax evasion,” the economist said in a press release.

He explained that among these taxes, tax evasion is most common in large taxpayers and corporate income tax, and he guaranteed that the evasion rate is over 60%.

He called to inquire that tax evasion (42%) and income tax (60%) account for about 3.4/3.5 of GDP, close to 300 billion pesos, and pointed out that only by solving problems in this area can the deficit be significantly reduced.

Ciriaco Cruz, who participated in a commentary program moderated by journalists Rafael Núñez and Adelaida Martínez, said that the tax reform proposal prepared by the UASD Faculty of Economics and Social Sciences considers reducing the ITBIS tax rate from 18% to 14%, as well as abolishing the advance payment.

Regarding exemptions, he stressed that some sectors that have grown but no longer need exemptions should be reviewed, but they proposed maintaining exemptions in three areas they consider important: food, medicine, education and culture.

“In the case of itbis, when you lower interest rates, you give the middle class the ability to consume more… So, you can give them some relief, but you have to make up a story,” he said.

A single tax system for MSMEs and entrepreneurs

Economist Antonio Ciriaco noted that the fiscal reform proposals prepared by the UASD School of Economics and Social Sciences were made with the least political cost.

He pointed out that as far as small and medium-sized entrepreneurs are concerned, they recommend taking Uruguay as a reference and transforming the current simplified tax system into a fixed single tax system.

He explained that this flat tax means no sworn declarations are made, but rather a fixed amount is paid annually, half-yearly or quarterly, the exact amount varying depending on the size of the company.

He recalled that in the country, the private sector accounts for 85 percent of the economy and the public sector for 15 percent, and stressed that the most important thing about the flat tax is that it can even facilitate entrepreneurs.

“When you tell someone who wants to start working or someone who is doing production that they will pay a fixed amount and that includes all taxes and other payments, then you have simplified the process,” Ciriaco Cruz said.

He said there were other issues in this reform that had to be on the table because of their impact on public finances, such as the situation with quasi-fiscal debt, which he believed should be given to the Ministry of Finance, which he claimed would generate lower interest rates.

In the case of income tax, where economists believe that tax evasion is the highest and taxpayers are high, the proposal contemplates changing the calculation method to collect more resources.

He stressed that when all taxes are relieved by increasing the base, revenue will be increased.

RD included in comprehensive tax reform list

Before detailing the main points of the tax reform proposal that will be presented by the UASD School of Economics and Social Sciences, Dean Antonio Ciriaco Cruz said it is necessary and pertinent.

He said the country is in the best time to implement this reform because the economy has recovered, economic growth is continuing, expectations are good and employment levels are good, which are the basic conditions for this process to take place.

He considers as positive the fact that the President of the Republic has reached a consensus on tax reform with the country’s main political leaders.

The economist stressed that the reform was delayed because it was mandated by the National Development Strategy Law (END) and should have been completed in 2012 or 2013, but was to be implemented in 2015.

“I think it has to be done because it is the mother of all other reforms … From our perspective, comprehensive and long-term tax reform has to be outlined,” he said.

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