DOMINICAN CONGRESSIONAL LEADER OPTIMISTIC ABOUT

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.

- - - - - - - - - - - - - - -
On to the Senate
- - - - - - - - - - - - - - -


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."

- - - - - - - - - - - - -
Party Headquarters Oppose
- - - - - - - - - - - - -


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