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    Posted November 11, 2012 by
    KeDificil
    Location
    Santo Domingo, Dominican Republic
    Assignment
    Assignment

    Dominicans hit the streets as tax reform becomes law

     

    Massive protests have been called for this Sunday in the Dominican Republic, a day after President Danilo Medina signed into law a bill that's expected to raise government revenue up to 2% of GDP, in an attempt to tackle a budget deficit that this year will amount to nearly 8% of GDP.

    Protesters react to measures that look to increase national sales tax from 16% to 18% in most products; and sets a special sales tax to previously exempt products like certain foods and services that will range from 6% to 10%. Amongst other tax increases.

    Budget deficit projected for 2012 was scheduled to end at nearly 2% of GDP this year, but as admitted by the authorities, a spending surge during the previous government of Leonel Fernandez, who is in the same party as current President Medina, during the run up to elections, skyrocketed the deficit to nearly 4 times that initial projection.

    The tax reform is set to make the Dominican Republic one of the first countries to apply "fat taxes" as selective consumption taxes will be included for sodas, candy and chocolate. Selective taxes on alcohol and tobacco will also be increased a half-fold, with telecommunications also being affected by this type of taxes set to increase from a staggering 28% selective tax, to 30%, affecting land phones, cellphones, cable TV and the internet.

    Protesters calling for this march are mostly middle class youth, a group that as of now had rarely been vocal in past protests in the country. They see this as them footing the bill for what they perceive as reckless spending and corruption from President Medina´s fellow party members, and amongst other things, are calling for those responsible to face trial for corruption charges.

    President Medina who had vowed in his campaign to reduce taxes in order to tackle a massively informal economy, where less than 51% of business reports their taxable income, called this tax reform a "sour beverage".

    Although initially Medina seemed to have showed interest in reaching some form of agreement with civil society, labor unions and businesses under an Economic and Social Council, talks where cut short and the project was sent to Congress where the President´s party holds majority in both houses seeing the approval of the tax reform in less than 13 days.

    Already protest against the reform have turn deadly as a college student and a high school teacher where killed when police officers started using live bullets on protesters. President Medina vowed to bring those responsible to justice, but this has done little to curb the anger of protesters nationwide.

    Dominicans face this tax increase as they see their economy slowing down from an average growth of nearly 7% after the 2008 global financial crisis to a mere 4% amid the impact of several tropical storms in the island this year, slow growth in the US and Europe´s long standing debt crisis.

    Today´s protest is being called to be peaceful and volunteers have asked all those participating in the protest to avoid violence at all cost, giving tips in social media as to how to turn away from provocation or any form of violence during their march, in a country where Amnesty International accuses the police forces to perform extra-judicial executions against citizens on a daily basis.

    This marks the first significant protests faced by recently elected President Medina, and while the anger of the protesters is evident, coupled with the active role of the middle class in a country where this group is rarely seen as militant on any issue, the chances of the protests becoming an open revolt against the government remain highly unlikely.

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