Santo Domingo, RD.
In its most recent macroeconomic report, the Inter-American Development Bank (IDB) Proposes to all member states in Latin America and the Caribbean, including the Dominican Republic, who implement a tax reform in the same year to overcome the crisis and ensure debt sustainability.
The multilateral body recommends cutting out at least 4% of GDP in expenditure, but not with reductions or limitations of infrastructure investments, but eliminating the “leaks” that occur in social transfers and in tax expenditures, as “no less than 84% of tax expenditures ultimately accrues to the non-poor”.
Other leaks identified by IDB research economists representing about 7% of GDP are the high salaries in the public sector compared to those in the private sector.
It reveals that Unskilled workers in the public sector earn 23% higher wages than comparable workers in the private sector, in addition, there is waste in the processes of acquisition and contracting of goods, services and government investment. “
Overall, the savings in these three budget lines alone could free up the equivalent of about 4% of GDP for growth-oriented spending or more efficient ways to promote equality, ”he explains.
Tax proposal
Among a series of measures, the Suggest IDB economists considering LAC governments a reduction in payroll taxes, a reduction in tariffs on the import of capital goods, an increase in the tax base and an income tax credit for the employee, that is, a tax credit on the income from work.
In addition, the VAT or ITBIS rate is uniform and without exemptions.
With regard to income tax (ISR), IDB researchers reveal that the tax rate in the region is above the advanced economies, averaging 27% versus 22%.
The effective taxes for companies reach up to 60%, while in advanced economies this is 40% and in emerging Asia 40%. They believe it is better to increase labor formalities rather than generate income from corporate tax.
With regard to the wealth tax, it was found that the region collects little. He also suggests applying a carbon tax, which could be $ 75 per ton. Tax on digital platforms and lower tax spend.