Dominican Republic - Politics, government, and taxation

The Dominican Republic is a multi-party democracy, with the president, 149-seat Chamber of Deputies, 30-seat Senate, and local officials elected by popular vote. The Supreme Court judges are elected by a council made up of executive and legislative representatives.

Since the death of Trujillo in 1961, 3 main political parties have dominated Dominican politics. The Dominican Revolutionary Party (PRD), a moderate social-democratic organization, won elections in May 2000, with Hipolito Mejia assuming the presidency. The PRD replaced the Party of Dominican Liberation (PLD), whose president, Leonel Fernández Reyna, had introduced important free-market reforms from 1996. The third party is the Social Christian Reformist Party (PRSC), which presented the 94-year-old Joaquín Balaguer, 7 times president since the 1950s, as its candidate in 2000.

Little separates the main parties in terms of economic policy, although Balaguer's PRSC has proved to be more hostile than the others to privatization. All are in favor of moving towards a free-market economy and encouraging foreign investment in the country. Differences between Dominican parties tend to be more personal than ideological, although the PRSC is generally regarded as more conservative and less committed to redistributing wealth than its competitors. Balaguer's autocratic style of government also concentrated economic decision-making and resources in the hands of the president, allowing him to control a large proportion of the national budget.

Government economic policy since the 1960s has been more or less consistent, but some administrations have been forced to adopt unpopular austerity programs due to recession and a deteriorating economic situation. After the recession of the 1980s, successive Dominican governments have attempted to maintain strong economic growth while keeping inflation under control. Priorities have included not only the sale of state-owned enterprises and an end to subsidies to these bodies but also considerable investment in roads and other infrastructural development related to tourism and manufacturing. The damage caused by Hurricane Georges in September 1998, estimated at US$2 billion, also required exceptional government investment, but part of this money was provided by grants and loans from multilateral institutions such as the World Bank. The PRD administration elected in 2000 intends to follow free-market reforms, continuing to privatize state assets, attract foreign investment, and promote the country as a tourism destination and stable offshore manufacturing location.

Government tax revenue relies more on sales and business taxes than income tax . Low levels of income-tax collection, due in large part to tax evasion and bureaucratic incompetence, have forced successive governments to increase taxes on consumer goods and services. Pressure to dismantle tariff barriers in keeping with trade agreements with the United States and other countries have reduced revenues on imported goods, with a resulting rise in sales taxes on many basic items. In 2001 the Mejia administration raised a number of indirect taxes but was forced to introduce subsidies and relief programs to offset the impact on the poor.

Country Newspapers Radios TV Sets a Cable subscribers a Mobile Phones a Fax Machines a Personal Computers a Internet Hosts b Internet Users b
1996 1997 1998 1998 1998 1998 1998 1999 1999
Dominican Republic 52 178 95 15.5 31 0.3 N/A 7.63 25
United States 215 2,146 847 244.3 256 78.4 458.6 1,508.77 74,100
Jamaica 62 480 182 73.1 22 N/A 39.4 1.04 60
Haiti 3 55 5 N/A 0 N/A N/A 0.00 6
a Data are from International Telecommunication Union, World Telecommunication Development Report 1999 and are per 1,000 people.
b Data are from the Internet Software Consortium ( ) and are per 10,000 people.
SOURCE: World Bank. World Development Indicators 2000.

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