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New fiscal policy should benefit poorest Dominicans

Santo Domingo. – A World Bank report released Thursday suggests that the Dominican Republic can eradicate extreme poverty through improvements in fiscal and social policy.

The study entitled “Fiscal and redistribution policy in the Dominican Republic” indicates that an additional expenditure of 1.3 percent of GDP to double the transfers to the poorest and achieve universal health coverage and public education even administrative reforms, the Caribbean country can achieve that all Dominicans rise above the extreme poverty line.

“To achieve this, the report considers essential to review fiscal policies focusing on administrative measures to reduce tax evasion and reduce informality. It also suggests a review of electricity subsidies to ensure that benefit those who need it most,” the report says.

“The World Bank analysis confirms that the Dominican Republic is on the right track, limited only by the achievements in social terms, and contributes to our plan in this new period of implementing reforms aimed at improving the delivery of public services to the population and make more equitable economic growth,” said Dominican Economy minister Isidoro Santana.

Over the past three decades, the Dominican Republic has been among the fastest growing economies in Latin America and the Caribbean, the World Bank notes. “In fact, in 2014 and 2015 it was the economy that grew an average of 7.2 percent and is forecast to continue robust economic growth in 2016, about 6 percent.”

“But despite the considerable efforts of the Government to increase social spending in recent years, a limited revenue capacity has restricted the scope of its policies keeping deficiencies in the provision of public services that reduce their impact on levels of poverty and inequality.”

“One of the main challenges for the Dominican Republic is to broaden the fiscal space, maintaining the progressivity of the system. In this context, the next Fiscal Pact offers a unique opportunity to address reforms to strengthen fiscal sustainability and achieve better results for equity and poverty reduction,” said Alessandro Legrottaglie, World Bank representative in the country.

The report suggests priorities to close the equity gap:

· Reforming the system of indirect taxes, focusing on tax exemptions Transfer of Industrial Goods and Services (BITS), the main VAT of the Dominican Republic, which benefit mostly middle and upper classes and accounting for 3% of GDP from 2013.

· Reforming electricity subsidies and programs such as Bon-gas and Bono-luz, retaining those that benefit the poorest.

· Increase subsidies that benefit the poor such as Eating is first, Incentive for school attendance and health services, avoiding creating new ones.

· Continue implementation of the recommendations of the Pact for Education to improve quality.

Source: DT

Nov 3, 2016

Category: DR News |

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Last updated March 29, 2017 at 11:04 PM
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