Dominican Republic: Selected Issues

Fiscal adjustment and tax reform during the early 1990s were instrumental in achieving high real economic growth rates and moderate inflation for the remainder of the decade. However, by the middle of the decade the reform process slowed substantially. In recent years, important gains in tax administration helped to keep the overall public sector deficit in check, while a greater reliance on broad-based domestic taxes was gradually being achieved The authorities have proposed or are considering a number of fiscal policy reforms that would extend the progress made in recent years and would enhance the transparency and efficiency of public sector operations. It is expected that over the medium term the savings achieved from this reform agenda would allow an increase in government spending in priority areas, such as health, education, and basic infrastructure.

Abstract

Fiscal adjustment and tax reform during the early 1990s were instrumental in achieving high real economic growth rates and moderate inflation for the remainder of the decade. However, by the middle of the decade the reform process slowed substantially. In recent years, important gains in tax administration helped to keep the overall public sector deficit in check, while a greater reliance on broad-based domestic taxes was gradually being achieved The authorities have proposed or are considering a number of fiscal policy reforms that would extend the progress made in recent years and would enhance the transparency and efficiency of public sector operations. It is expected that over the medium term the savings achieved from this reform agenda would allow an increase in government spending in priority areas, such as health, education, and basic infrastructure.

IV. A Review of Fiscal Policy During the 1990s and Present Policy Considerations36

A. Introduction

62. The New Economic Program adopted in late 1990 established fiscal discipline, through a comprehensive tax reform and expenditure controls, and paved the way for an extended period of strong economic growth and macroeconomic stability. Moreover, the New Economic Program reduced economic distortions and initiated a shift in the tax base toward more stable, broad-based domestic taxes on income and consumption. Although there were some slippages during the mid-1990s, and a lack of political consensus slowed down the reform process, fiscal discipline was generally maintained over the latter part of the decade. In particular, significant improvements in administration lifted tax collections to 15 percent of GDP by 1998, their highest level in more than 20 years.

63. Although much has been achieved in recent years, the authorities recognize that additional improvements in fiscal policy are still needed. Steps presently under consideration include tax and tariff reform, tax simplification, and restructuring fuel taxes; modernizing public institutions, particularly with regard to budgetary procedures and public sector employment; and regularizing outstanding domestic arrears. It is expected that these steps will enhance public sector savings and will generate resources for increased spending on priority areas, including health, education, and basic infrastructure.

64. This chapter reviews the contribution of fiscal policy to the stabilization of the Dominican economy. It describes the major tax reforms and improvements in administration achieved during the 1990s, as well as developments on the spending side. The chapter concludes with a summary of fiscal policy proposals presently being considered by the authorities that would contribute to a consolidation of the gains achieved in recent years.

B. Contribution of Fiscal Policy to Macroeconomic Stability During the 1990s

65. The monetization of fiscal deficits is a leading cause of high growth in monetary aggregates and high inflation, which is a serious deterrent to economic growth. During the 1980s, the Dominican Republic had fallen into this trap. Overall public sector deficits remained high throughout the decade, averaging 5½ percent of GDP per year, including the quasi-fiscal losses of the central bank (BCRD). When external financing of these deficits largely dried up in the early part of the decade, the recourse to domestic financing, primarily from the state-owned commercial bank, Banco de Reservas, quickly led to an excessive monetary expansion.37 In turn, this set off an acceleration in inflation, which contributed to exchange rate pressures, a loss of official international reserves, and an accumulation of external payments arrears. During 1984–90, annual inflation averaged over 35 percent, peaking at 80 percent during 1990, despite at least one short-lived attempt to stabilize the economy in 1985. Institutional and economic rigidities, such as prices controls, exacerbated the negative effect of these disruptions on the economy, as annual real GDP growth during this same period averaged less than 2 percent, including a nearly 6 percent plunge in real GDP in 1990.

66. In contrast to the previous decade, the generally disciplined fiscal policy position assumed during the 1990s, played a central role in creating a stable macroeconomic environment that was conducive to high economic growth rates. Domestic bank financing of the public sector was reduced, monetary expansion was lowered, and annual inflation rates were held to single digits for nearly the entire 1991–98 period (Figure 1). More specifically, the initial stabilization effort embedded in the New Economic Program shifted the overall public sector balance from a deficit of 5 percent of GDP in 1990 to surpluses in 1991 and 1992 (Table 1). This, along with other important structural adjustments included in the program,38 helped reverse the economic deterioration, with real GDP growing by 1 percent and inflation falling to just under 8 percent during 1991, followed by 8 percent real GDP growth and 5 percent inflation during 1992. Following this strong initial stabilization, aside from some slippages associated with the political crisis in 1994,39 the overall public sector deficit remained under control During the 1993–98 period, the deficit generally remained less than 2½ percent of GDP, annual real GDP growth averaged nearly 6 percent, and inflation (end-period basis) averaged about 7½ percent per year.

Figure 1.
Figure 1.

Dominican Republic: The Overall Public Sector Balance, Net Domestic Bank Credit to Public Sector, and Inflation

Citation: IMF Staff Country Reports 1999, 117; 10.5089/9781451811285.002.A004

Sources: Central Bank of the Dominican Republic; and Fund staff estimates.
Table 1.

Dominican Republic: Summary of the Consolidated Public Sector

(In percent of GDP)

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Sources: National Budget Office; Central Bank of the Dominican Republic; and Fund staff estimates.

Net of intrapublic sector transector transfers.

Refers to the overall balance of the nonconsolidated public enterprises, off-budget revenues, unidentified discretionary spending, and statistical discrepancies.

67. The 1990–92 stabilization effort was achieved mainly through a strict cash management system and strengthened tax revenues. All fiscal operations, including the discretionary spending of the presidency, were placed under a strict cash management system. A swing of 3½ percentage points of GDP was achieved in the residual component of the public sector accounts, which encompasses off-budget revenues, unidentified discretionary spending, and the overall balance of the nonconsolidated public enterprises, from a deficit of 3 percent of GDP in 1990 to a surplus of ½ percent of GDP in 1991 and nearly 2 percent of GDP in 1992. Government tax revenues climbed by nearly 3½ percent of GDP between 1990 and 1992 (Table 2). Most importantly, increases of 200–300 percent in the state-controlled price of petroleum derivatives during late 1990, resulted in a sharp increase in annual revenues from the petroleum differential (fuel taxes), to about 2 percent of GDP in 1991–92 from near zero in 1990.40 Revenue from customs duties rose by about 1½ percent of GDP in 1992, as imports surged with the improvement in the economy and the liberalizing impact of the tariff reform. However, equally important was the switch to a market-based exchange rate for valuing customs duties, instead of the previously overvalued official rate. The increase in the value-added tax rate (impuesto sobre transacciones de bienes industrialesy servicios, ITBIS) from 6 percent to 8 percent in 1992 also lifted revenue by about ½ percent of GDP.

Table 2.

Dominican Republic: Summary Operations of the Central Government

(In percent of GDP)

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Sources: The National Budget Office (ONAPRE); the Central Bank of the Dominican Republic; and Fund staff estimates.

Includes extrabudgetary expenditure not reported by ONAPRE.

External debt service of the public enterprises.

Reflects net payments deferred to the following year.

68. The large increase in tax revenue and reduction in net off-budget spending allowed for some increases in budgetary spending without disrupting the stabilization effort. In particular, capital spending increased by about 1½ percent of GDP between 1990 and 1992. Reductions relative to GDP in the government wage bill and interest on external debt (mainly due to debt relief received from Venezuela, Mexico, and Paris Club members) ameliorated the impact of the increase in capital expenditure on total spending. Also, the operational balance of the public enterprises was brought to near zero by 1992, compared with operational losses of about ½ percent of GDP in 1990.

69. As noted above, there was a temporary deterioration in the fiscal accounts in 1994, as the overall public sector deficit jumped to 4 percent of GDP. Election year pressures weakened the cash management system, as government spending rose, particularly capital spending, and a net off-budget deficit reemerged for the first time since 1990. Also, revenues fell, mainly due to administrative problems in the customs area.

70. The setback in 1994 was only temporary. However, due to a lack of political consensus, bringing the overall public sector deficit under control again had to be achieved initially through spending restraint and then through administrative measures. In 1995 the overall public sector deficit was again reduced sharply, to 1 percent of GDP, but this time through cuts in central government capital spending. Tax revenue remained weak, however, falling further to only 13 percent of GDP in 1996, the lowest level since the stabilization program began. Customs revenue collections continued to fall and a surge in international oil prices cut deeply into revenue from the petroleum differential. At end-1996, the authorities had also raised domestic fuel prices to strengthen revenues from the petroleum differential. During 1997-98, a concerted effort to improve tax administration through automation of customs, creation of large taxpayer units, tough penalties for late payment (following a brief amnesty period), and cross-checking devices enabled tax collections to climb to a new high of 15 percent of GDP by 1998, with no major changes to the tax law.

71. Since the spending cuts in 1995, central government current expenditures have climbed sharply relative to GDP rising to over 12 percent of GDP in 1998 from 9 percent of GDP in 1996. The roughly 50 percent increase in public sector wages effective March 1, 1997, and a steady increase in current transfers, mostly to the public sector,41 were largely responsible for the rise in current spending. In 1998 some curbs on this spending growth were implemented, such as a freeze on public sector wages, but hurricane-related spending during the fourth quarter negated earlier efforts to reduce current spending during the year.

72. Growth in total government spending was moderated, however, by cutbacks in capital spending. Between 1996 and 1998, capital spending fell by about 2 percent of GDP from their earlier, excessive levels, as the outgoing government hurried to complete some major construction projects before leaving office in 1996.

73. Another development in recent years, since the relaxation of the cash management system, has been the accumulation of domestic arrears, mainly to contractors and suppliers. The lack of transparency in the budget process, together with the loose coordination between the revenue and spending agencies of the government allowed a backlog of domestic arrears to accumulate, totaling 3½ percent of GDP by end-1998.

C. Tax Reform and Administration

74. The tax reform of 1990–92 had to be comprehensive in order to correct a tax system of immense complexity that had lost much of its revenue-generating capacity due to the high inflation of the late 1980s and 1990. The reform encompassed taxes on international trade, personal and corporate income taxes, the value-added tax, and excise taxes. The tax reform was successful in gradually shifting the tax burden to the broad-based income and value-added taxes, and thus securing a more stable revenue base with growth potential. Separately, the petroleum differential was also increased dramatically through a correction to state-controlled prices during second half of 1990.

75. The tariff reform initiated in September 1990 addressed numerous problems in the existing system.42 As noted in Chapter 2, the tariff reform simplified customs duties by reducing the number of tariff rates from well over 100 to 8, ranging from 5 percent to 35 percent,43 and eliminating an array of specific import taxes. While this represented a sharp reduction in the maximum tariff rate (from over 100 percent), tariffs were still high by regional standards and the tariff structure allowed for a continuation of high rates of effective protection for domestic industries. Also, concomitant with the tariff reform, the authorities imposed new selective consumption taxes on various import items with rates of 5–80 percent. As a result, despite having taken a major step forward, the Dominican Republic still retained a relatively restrictive trade regime. The reform did, however, eliminate export taxes.

76. The new tax code issued in May 1992 (Law 11–92) modified domestic taxes in a profound way. For the personal income tax, it reduced marginal income tax rates substantially, with the maximum rate falling initially from 70 percent to 30 percent and then to 25 percent by 1995. The number of tax brackets was reduced from 16 to 3 with tax rates of 15 percent and 20 percent applied to the lower brackets. The level of minimum taxable income was raised (to about 3–4 times the minimum wage), effectively exempting 90 percent of wage earners from the income tax, thus greatly enhancing tax progressivity and simplifying administration. Tax brackets were also adjusted annually for inflation during the previous year and most tax deductions were eliminated.

77. The corporate income tax underwent similar reforms. The tax rate was lowered from 46 percent to 30 percent in 1992 and then to 25 percent by 1995, which not only reduced the disincentives to formalizing operations, but also harmonized the corporate income tax with the personal income tax.44 The reform also introduced mechanisms to adjust the tax base for inflation, eliminated the double taxation of dividend income, and expanded tax coverage.

78. The new tax code also raised consumption taxes. In particular, the value-added tax rate was raised from 6 percent to 8 percent and various excise taxes were converted from specific to ad valorem taxes, after having lost much of their effectiveness due to the previously high rates of inflation. By international standards for value-added taxes, the 8 percent ITBIS tax rate is still quite low.45 Also, about half of the economy’s value added is covered by exemptions, thus limiting revenues and complicating administration.

79. The tax reform has had success, though gradual, in shifting the tax burden to the more stable, broad-based domestic taxes with improved revenue growth potential. That is, the share of total tax revenue generated by the income and value-added taxes grew from about 33 percent in 1992 to 39 percent in 1998 (Table 3). As a share of total tax revenue, revenue from import duties fell sharply between 1992 and 1995, before leveling off at 29 percent. Revenue from the petroleum differential, in contrast, has averaged about 15 percent of total tax revenue, but its variation has been substantial, ranging from 12 percent to 17 percent of total tax revenue.

Table 3.

Dominican Republic: Tax Revenue by Source

(In percent of total tax revenue)

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Sources: The National Budget Office (ONAPRE); and the Central Bank of the Dominican Republic.

Consists of income taxes and the value-added tax (ITBIS).

80. The structure of the petroleum differential has made it susceptible to large swings in revenue generating capacity. The tax is determined as the difference between the pump price of various fuels (gasoline, diesel, kerosene, aviation fuel, fuel oil, and propane gas),46 which are controlled by the state, less their ex-refinery price and a distributor’s margin. The ex-refinery price varies directly with international oil prices and changes in the official exchange rate.47 The pump prices, however, are seldom adjusted, so that a fall in world prices provides a boost to revenues, while an exchange rate depreciation or an increase in world prices reduces revenues. For example, fuel prices were left essentially unchanged between late 1990 and late 1996, at which time higher international oil prices and a devaluation of the peso cut deeply into revenues. Although a price adjustment mechanism was then incorporated into the differential’s regulations, it has been used infrequently, and mostly for price decreases.

81. Following the 1994 presidential election and strong gains by the opposition in the legislature in the 1996 election, the tax reform process slowed as the political climate became more difficult. With only minor changes, the tax code has been left essentially unchanged since the mid-1990s.48

82. Significant advances have been achieved in the area of tax administration in recent years. In 1997, an automated system for customs administration was implemented at the major air and sea ports. This system eliminated the discretion that had been available to customs officers administering import duties, which was a major source of revenue losses and potential corruption. Since 1996, customs revenues have increased by ½ percent of GDP. With regard to imports of large items, such as vehicles, machinery and equipment, and large consumer durables, customs administration has been building the capacity to cross-check information with income and value-added taxes to ensure consistency in taxpayers’ declarations of these taxes.

83. To facilitate the coordination of domestic taxes, the administrative agency for income taxes was combined with the agency responsible for the value-added tax and other domestic taxes to form the Direction General de Impuestos Internos (DGII) in 1996. The first priority of the DGII was to establish a large taxpayer unit for the capital district, which was accomplished in late 1997, with about 450 registered taxpayers. These taxpayers would be subject to a full tax audit at least once every three years. As of mid-1999, the DGII is on schedule with its goal to complete the first round of audits by end-2000.49 The authorities have also made a strong effort in registering all taxpayers, big and small, with a unique identity code. As a result of these efforts, and development of the cross-checking system, tax collections (particularly from the ITBIS) from the small- and medium-sized firms have also been growing rapidly. To encourage voluntary compliance with the tax code and taxpayer registration, the government offered a temporary tax amnesty in 1997, which was followed by the enforcement of stiff penalties, such as a penalty interest rate of 25 percent per month for late payment. The authorities are considering another such amnesty in an effort to register a second wave of taxpayers. Tax administration is still hampered, however, by the existence of numerous small taxes and fees, which generate little or no revenue.

D. Proposals for Reform

Tax and tariff reform, tax simplification, and restructuring fuel taxes

84. The proposed tax and tariff reform now awaiting congressional approval would represent a large step toward opening up the Dominican economy.50 In many ways, this reform would be a continuation of the tax and tariff reform of the early 1990s. That is, the reform would lower the maximum tariff rate to 15 percent in two steps (over two years), while reducing the number of tariff rates to four. To compensate for the loss in tariff revenue, the reform would simultaneously raise the ITBIS rate, initially to 12 percent and then to 14 percent in the second step. This measure would add 2–3 percent of GDP to ITBIS revenues, thus increasing the share of the revenue generated by broad-based domestic taxes to over 50 percent of total tax revenues. The proposed tax and tariff reform would also raise selected excise taxes on beer, alcoholic beverages, and tobacco products.

85. The authorities are considering a major simplification of the tax code. At the present time, there are close to 300 individual revenue items in the accounts of the national treasury, many of which generate very little, if any, revenue. Most of these items could be eliminated or consolidated with a minimal loss of revenue, yielding savings in tax administration.

86. As a medium-term objective, the authorities are also considering a reform of the petroleum differential that would enable domestic fuel prices to adjust more automatically to input costs (that is, world oil prices and the exchange rate). Two options are a specific tax per unit of consumption, regularly adjusted for inflation, and an ad valorem tax. Either tax would prevent the periodic deterioration of revenue due to increases in world oil prices or depreciation of the peso.

The budget process, discretionary spending, and modernization of the state

87. The authorities also are considering a reform to the budget process, which presently lacks transparency and accountability. That is, the office of the presidency maintains discretionary spending accounts generally free from congressional oversight. Although the present administration has reduced the use of these accounts, mainly by gaining congressional approval of their budget proposals and meeting budget targets, discretional spending still accounts for about 20 percent of total government spending (down from about 50 percent under the previous administration).

88. Revenue is directed to these discretionary accounts through two main sources. First, in the budget process, a revenue target for the upcoming year is determined. Any revenue collected during the course of the year in excess of this amount becomes available to the office of the presidency (known as account 1401). Second, the budget approved by congress sets maximum spending limits on each item. If spending is held below these limits, the unspent resources are also redirected to discretionary accounts. If congress fails to approve the administration’s budget proposal, the revenue estimates and spending limits of the previously approved budget remain in effect, unadjusted for growth or inflation. These rules create extraordinary leverage for the administration in the approval of the budget, weakening the role of congressional oversight. If congress rejects the administration’s proposal, it increases the discretionary funds available to the presidency as tax revenues grow.

89. Under the present institutional procedures for execution of the budget, slippages in the coordination and control of expenditures may occur,51 giving rise to domestic arrears. That is, the main revenue collection agencies (customs and the DGII) report to the secretary of finance,52 while the budget office (ONAPRE) reports to the technical secretary of the presidency. The controller’s office, which is a separate branch of the administration, serves as an intermediary between the two. Thus, over the course of the year, ONAPRE notifies the online spending agencies of their spending limits. The agencies then proceed with their spending programs. However, there is no firm commitment by the government to cover these expenses until they are approved by the controller’s office. Once a commitment has been approved, however, payment is made by the national treasury, depending upon available resources. As a result, domestic arrears have accumulated, when the coordination between the budget execution agencies has been relaxed. As these arrears have become a regular feature of government operations, procurement costs have risen and the government’s creditworthiness has been damaged.

90. The authorities are considering a comprehensive proposal for the modernization of the state, which in addition to streamlining the public sector and enhancing the efficiency of government operations, would also address the problems in the budget process. Limits would be placed on discretionary accounts and the role of congress would be strengthened in both the development of the budget and in oversight responsibilities, while still allowing some degree of flexibility in the execution of the budget. Through the streamlining of the public sector, the modernization of the state would also aim to rationalize the size of the civil service. Over the years, numerous inefficiencies and duplications have developed in the responsibilities of government agencies, leading to an excessive expansion in public sector employment. While trimming the size of any civil service is a difficult proposition, it is anticipated that savings from this task would enable the public sector to offer more competitive wages to retain qualified staff, while still reducing the total wage bill, and permitting a reallocation of resources to priority areas.

Regularizing domestic arrears

91. The steps taken to regularize domestic arrears are divided along the lines of obligations accumulated by the present administration and those accumulated by previous governments. With regard to the latter, a proposal is with the congress that would convert the recognized obligations (totaling RD$5 billion or just over 2 percent of 1998 GDP) into marketable government securities. It has been proposed that these securities have a 10-year maturity and a 5 percent interest rate, but their terms are still subject to negotiation between the administration and congress.

92. Toward the end of 1998, the outstanding claims on the present administration were formalized into certificates that assured claimants that they would be compensated by August 2000, the end of the president’s term. These certificates totaled RD$2.7 billion or just over 1 percent of GDP. It has been negotiated with representatives of the claimants that the government would settle the majority of the these claims through land-for-debt swaps, mostly involving lands provided by the state sugar company (CEA).53 The government has also established monthly auctions to buy back in cash a relatively small amount of these certificates. Through the first several auctions, the government has obtained about a 50 percent discount on the face value of the certificates.

Redirecting spending toward priority areas

93. The authorities have acknowledged that while the primary approach toward improving social conditions and poverty alleviation is to sustain high real GDP growth rates for the economy, more government resources also need to be directed toward social services, including health and education, and basic infrastructure. During the first two years of the present administration, spending on health and education rose to just over 3½ percent of GDP in 1997,54 compared with just over 3 percent of GDP in 1995. But these spending levels are still low by international standards. It is anticipated, that over the medium term, through savings obtained from the reduction in transfers to public enterprises, largely achieved through the ongoing privatization process,55 and a rationalization of the civil service, spending in these priority areas, as well as on basic infrastructure, could grow by 2–3 percent of GDP.

E. Conclusion

94. A remarkable fiscal adjustment and comprehensive tax reform during the early 1990s were instrumental in achieving high real GDP growth rates and moderate inflation for the remainder of the decade. However, largely due to the difficult political climate that prevailed during the mid-1990s, the pace of fiscal reform slowed. To date, the reform agenda for fiscal policy remains unfinished and a number of proposals are being considered that would enhance the tax base, including a shift toward greater reliance on broad-based domestic taxes, and an improvement in the efficiency and transparency of public sector operations. It is expected that over the medium term, the savings achieved from these reforms would allow an increase of 2-3 percentage points of GDP in government spending in priority areas, such as health, education and basic infrastructure.

List of References

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  • Directión General de Impuestos Internos, 1999, “Proyecto de Simplificatión del Sistema Tributario,” (preliminary).

  • Foreign Tax Law Publishers, 1993, Tax Laws of the World—Dominican Republic, (Ormond Beach, Florida).

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  • Oficina National de Planificación, 1998, “La Economía Dominicana: Comportamiento Reciente y Perspectivas de Mediano Plazo,” (unpublished).

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  • Oficina Nacional de Presupuesto, 1998, Informe de Ejecución Presupuestaria 1997, (Santo Domingo).

  • Pellerano, Fenando, 1999, “Una Evaluatión de la Situatión Fiscal Dominicana,” Secretaría de Finanzas, Working Paper.

  • World Bank, 1999, Country Assistance Strategy Paper of the World Bank Group for the Dominican Republic (Washington, DC).

36

This chapter was prepared by David Dunn.

37

The Banco de Reservas maintains roughly a 100 percent reserve on government deposits in the BCRD. Financing from this bank is equivalent to an expansion of net credit to the nonfinancial public sector by the central bank.

38

See Chapter 1, “Stabilization and Structural Reforms.”

39

The outturn of the 1994 presidential election was disputed, which contributed to a major capital outflow and loss in official reserves. The main political parties resolved the issue by declaring then President Balaguer the winner for a shortened 2-year term. The constitution was also amended to disallow the reelection of the president for consecutive terms.

40

These price increases coincided with rising world oil prices during the buildup to the Gulf War. Domestic fuel prices were left unchanged, even when world prices fell in early 1991.

41

In addition to the transfers to public enterprises, current government transfers largely reflect wage payments in the decentralized agencies of the general government.

42

The tariff reform was initially announced by decree in 1990 (Law 339-90) and finally set into law in September 1993, An exchange surcharge of 15 percent that was applied to about 40 percent of imports was gradually eliminated by June 1995.

43

Since then, two additional tariff rates of zero and 3 percent have been introduced.

44

The ten tax brackets that existed previously were also unified.

45

Originally, the proposed ITBIS tax rate was 10 percent, but it was never implemented.

46

The differential for propane is actually a subsidy (that is, it is negative).

47

The public/private joint venture national refinery (Refidomsa) essentially has monopoly rights to import petroleum products. It obtains its foreign exchange for these imports at the official exchange rate.

48

In 1998, taxes on business licenses and assets of financial institutions (patentes) were eliminated and taxes on international telephone calls were reduced.

49

By early 1999, the number of large taxpayers had increased to over 500 companies.

50

For a fuller account of this measure, see Chapter 2, “Trade Reform in the Dominican Republic.”

51

During the stabilization effort of the early 1990s, the president himself assumed the role of coordinating revenue and spending operations.

52

A substantial share of revenue collections, including the petroleum differential and nontax revenues associated with the granting of mining rights, are delivered directly to the national treasury or the office of the presidency.

53

CEA, which owns about one-third of the land in the Dominican Republic, would provide land to the government in exchange for government transfers it has received in recent years to cover its operating losses.

54

The most recent data available on central government spending by function.

55

See Chapter 1, “Stabilization and Structural Reforms” for a more thorough discussion of this reform.