US embassy cable - 04SANTODOMINGO4665

UNCLAS SANTO DOMINGO 004665 
 
SIPDIS 
 
SENSITIVE 
 
DEPT FOR WHA/CAR, WHA/EPSC, EB/OMA; TREASURY FOR LAMONICA, 
TOLOUI 
 
E.O. 12958: N/A 
TAGS: PGOV, EFIN, DR 
SUBJECT: DOMINICAN CONGRESSIONAL LEADER OPTIMISTIC ABOUT 
TAX PACKAGE DESPITE POSTURING 
 
 
1.  (SBU) On August 11 President of the Dominican House of 
Representatives Alfredo Pacheco told Charge and EcoPol 
counselor that he expected, in the worst of cases, to obtain 
House approval for the first reading of the tax reform 
package on August 12.  Congressional procedure requires two 
approvals of a measure before it is transmitted to the other 
house.  Pacheco said he expected the House to finish with the 
measure by August 20, the end of the first week of the 
Fernandez administration. 
 
2.  (U) President Mejia delivered the tax package to the 
lower house a month ago and, as promised, did not change 
anything in the draft drawn up by advisors to President-elect 
Fernandez. Hearings in the House Finance Committee have been 
extensive.  All sectors agree on the need to raise government 
revenues but each has had its own case to plead. House 
Finance Committee chair Marino Collante has told the press 
that members of "95 percent" of the way to agreement. 
 
3.  (SBU) Pacheco appeared confident that major differences 
had been ironed out.  He mentioned, as an example, the 
agreement to take the suggestion of the commercal banking 
association to replace a 15 percent tax on interest with a 
levy of 0.15 percent of the amount transferred by checks -- 
Pacheco said that the committee decided to exclude ATM 
transactions, as a measure of relief for the middle class. 
 
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On to the Senate 
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4.  (SBU) Pacheco's re-election as president of the House on 
August 16, before presidential inauguration ceremonies, is 
virtually assured, since there are no other serious 
contenders,  Sen. Andres Bautista is expected to win election 
as President of the Senate.  Pacheco and Bautista met earlier 
this week with Monsignor Agripino Nunez, who was urging early 
passage of the tax package.  Bautista, a member of the 
soon-to-be-opposiion PRD, assured Nunez that the Senate would 
finish its work on taxes "within 30 days, because of the 
needs of the country." 
 
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Party Headquarters Oppose 
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5.  (U) Newspaper stories on August 12 were suggesting 
complications.  The PRD party headquarters issued a formal 
statement, conditioning party acceptance of tax measures upon 
enactment of a 30 percent increase in salaries in both 
private and public sectors and a program to continue 
subsidies for cooking gas and to assure reasonable prices for 
staples and essential items.  The PRSC Executive Committee 
approved a resolution calling for the measure to be 
considered only after the August 16 inauguration, and 
instructed its representatives to walk out of any earlier 
plenary discussion of the project. 
 
6.  (SBU) Comment: We see these reactions as posturing, while 
the new opposition awaits to engage Fernandez after his own 
term begins next week.  No one really wants another 30 days 
of threadbare debate on these measures, which are, even as 
now drafted, only the barest starting point for bringing the 
IMF back to the table. 
 
KUBISKE