Why prices don't go down

[NewsWhore]

Economist Arturo Martinez Moya, not a particular friend of the current administration, explains why prices have not gone down in spite of the country entering the DR-CAFTA agreement over two months ago. Martinez Moya points out that taxes have produced more than RD$20 billion in additional monies during the first four months of 2007 compared to 2006. For the economist, the blame falls on the Department of Taxes that, in his words "wants to do in one year what it took Spain and Chile five years to do." He also points out that the upper middle class contributed 24% more in 2006 than in 2003 and in indirect taxes, paid mostly by the middle and lower income groups, the increase was 66% over the same time frame. In his article in Saturday's Hoy, Martinez Moya furthermore says that the "invisible hand" of Adam Smith doesn't work in the Dominican Republic, since many sectors of the economy are virtual monopolies. Thus, decreases in taxes do not necessarily mean a reduction in prices for consumers.

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