NewsWhore
10-10-2011, 01:20 PM
Fernandez administration officials have argued that tax burden in the DR is low, but economist Ernesto Selman of the Regional Center for Sustainable Economic Strategies now says that hidden costs make this much higher, as reported in Diario Libre.
Selman says that when taking government spending and hidden costs into consideration, the public sector influence is very high in the DR and the society has to take on a high opportunity cost for government intervention. He said that the tax pressure of 13.4% in 2010 has led economists, politicians and analysts to erroneously conclude that it is low and propose higher taxes.
On the other hand, there is a general perception that the GDP is overvalued, which would imply higher tax pressure than what the numbers show.
The study by the center indicates that taxes, GDP and government spending are the visible indicators that can be calculated in the economy. "But what is not visible is the cost that the economic agents have to take on as a result of institutions, regulations and public policies in the DR."
Selman says that the analysts do not consider the cost of the low quality of basic services. Likewise, the cost of excessive regulation, the burden of extra-official payments for receiving certain services, and the cost of non-priority government spending, namely political patronage and corruption.
He said productive sectors have to contract security services to private companies, as well as purchasing alternative power supply. There are also extra-official payments that need to be made to obtain permits, licenses and legal documentation through the government.
He says these resources could be put to better use in productive activities.
More... (http://www.dr1.com/index.html#3)
Selman says that when taking government spending and hidden costs into consideration, the public sector influence is very high in the DR and the society has to take on a high opportunity cost for government intervention. He said that the tax pressure of 13.4% in 2010 has led economists, politicians and analysts to erroneously conclude that it is low and propose higher taxes.
On the other hand, there is a general perception that the GDP is overvalued, which would imply higher tax pressure than what the numbers show.
The study by the center indicates that taxes, GDP and government spending are the visible indicators that can be calculated in the economy. "But what is not visible is the cost that the economic agents have to take on as a result of institutions, regulations and public policies in the DR."
Selman says that the analysts do not consider the cost of the low quality of basic services. Likewise, the cost of excessive regulation, the burden of extra-official payments for receiving certain services, and the cost of non-priority government spending, namely political patronage and corruption.
He said productive sectors have to contract security services to private companies, as well as purchasing alternative power supply. There are also extra-official payments that need to be made to obtain permits, licenses and legal documentation through the government.
He says these resources could be put to better use in productive activities.
More... (http://www.dr1.com/index.html#3)