Santo Domingo, RD.
In the most recent macroeconomic report, Inter-American Development Bank (IDB) Suggests that all Member States in the Latin American and Caribbean region, including the Dominican Republic, implementing a tax reform in the same year in order to overcome the crisis and guarantee debt sustainability.
The multilateral body recommends eliminating at least 4% of GDP in expenditure, but not with reductions or limitations on infrastructure investments, but eliminating the “leaks” that occur in social transfers and in tax expenditures, as “no less than 84% of tax expenditures end up benefiting the poor”.
Other leaks identified by IDB research economists who account for about 7% of GDP are the high salaries in the public sector relative to those in the private sector.
This reveals that Unskilled public sector workers earn 23% higher wages than similar private sector workers, in addition to the fact that there is waste in the processes of procurement and contracting of public goods, services and investments. “
In total, the savings in these three budget lines could release the equivalent of about 4% of GDP for pro-growth spending or for more efficient ways to promote equity, ”he explains.
Fiscal proposal
Among a number of measures, IDB economists propose which LAC governments consider a reduction in payroll taxes, a reduction in tariffs on imports of capital goods, an increase in the tax base and the application of an income credit to the worker, ie a tax credit for earned income.
In addition, the VAT or ITBIS rate is unified and without exemptions.
In terms of income tax (SRI), IDB researchers show that the tax rate in the region is above advanced savings, averaging 27% compared to 22%.
effective corporate taxes reach up to 60%, when in advanced economies it is 40% and in emerging Asia it is 40%. They believe that it is better to increase the formality of work instead of increasing income from income taxes.
Regarding the wealth tax, it was found that the region collects little. He also suggests applying a carbon tax, which could be $ 75 a tonne. Tax digital platforms and lower tax costs.