Fiscal Reform Dr

Fiscal Reform
The government presented on October 4th their proposal for a fiscal reform, in order to face the fiscal deficit that affects the country. This reform is looking to increase thegovernment incomes and reduce their expenses. With the intention of doing this, the government presented some measures that are focused on collecting more taxes. The reform contains the expansion of thevalue added tax, called ITBIS from 16% to 18%; raises from 7.5% to 15% the tax on alcoholic drinks; applies a 10% tax on the interest received by persons from financial institutions and increases from 13%to 15% the tax burden of the Gross Domestic Product (GDP).
The reform was presented by President Danilo Medina in the National Palace. First, he presented the proposal to the members of Congresswith the participation of different parties and then to the representative of the 50 institutions that make up the Economic and Social Council. The government hopes to collect some RD$53 billion morefrom these measures.
There are so many measures here that are bound to depress the economy. Some of these measures would affect principally, the poor people and the middle class.
Middle classrepresents around 44% of the total population. The poor and the middle class, almost 100% of their income goes to things that pay taxes, which means, that 100% is punished by taxation. The government proposesto establish an annual circulation tax for motor vehicles of 1% on the value. This measure obviously affects more, the middle class than the high class. If we want Dominicans to buy cars regularlyand not have unsafe old cars, the new tax is a great disincentive. A person that buys a car around 300k Rd$ probably doesn’t has a large income, so this means that every year he or she has to reduce 3kfrom their income. Even though it doesn’t seem to be a big amount of money, it surely affects a person because that’s money that they could have used in other stuffs, and also knowing that there...