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Instituto Tecnológico de Santo Domingo

INTEC economists analyze challenges of the Dominican economy; they assure digital platforms could partially transfer taxes to consumers

The School of Economics of that university, together with the newspaper El Dinero, analyzed the challenges and opportunities of the economy, as well as the main current economic issues

INTEC economists analyze challenges of the Dominican economy; they assure digital platforms could partially transfer taxes to consumers

SANTO DOMINGO. - two economists of Instituto Tecnológico de Santo Domingo (INTEC) assured that, if the Directorate General of Internal Taxes (DGII) record digital services such as Amazon, Google, Netflix, Spotify, DiDi, Uber, Airbnb and Indriver, among others, these companies could partially transfer that impuestos consumers.

Richard Medina, Academic Coordinator of the Economics career at INTEC, stated that the market in the Dominican Republic is small, so he does not doubt that companies transfer, even partially, taxes to consumers, although later it is the digital platform that report the tax to the collecting body.

Medina issued these arguments during his participation in the panel “A look at the economy, challenges and opportunities”, organized by the INTEC School of Economics in collaboration with the newspaper El Dinero, on the occasion of the National Day of the Economist that is celebrated on July 18.

In the panel, which was moderated by the journalist Jairon Severino, editor of the newspaper The moneyThe economists and teachers of INTEC also participated Harold vasquez, economic consultant of the Central Bank; Magdalena Lizardo, coordinator of the Dominican Observatory of International Trade, and Carlos Ramos, advisor to the National Competitiveness Council.

Likewise, regarding taxes on digital platforms, Professor Carlos Ramos indicated that it is necessary to know the price elasticity of demand for digital services, “but it is very difficult to say that there is no impact on the consumer. I highly doubt Netflix, Amazon Prime, HBO Max don't have the market power to pass those prices on to consumers. Perhaps not in its entirety, but at least partially.

possible recession

In the panel that was broadcast on the INTEC YouTube channel, the economists analyzed the possibility of a global recession. Magdalena Lizardo said that the economy is not free from a recession in a context tempered by the worst pandemic in a century and a war with implications far beyond the purely regional. “Those are two conditions that have led to extremely high inflation rates and that generate responses from central banks that induce an eventual recession, which is going to have consequences for us.” 

Lizardo pointed out that, if there is a recession, the prices of oil and raw materials will tend to fall, as will global demand, which will affect the Dominican economy. “A series of indicators are being followed up that indicate that a recession is very likely. One of them is, for example, the price of copper which is assumed to be a leading indicator of what may happen with world growth”, he said.

“What happens if there is a worldwide recession? How does it affect us? In favor of our country, this will imply lower prices for commodities, possibly including oil, but from the point of view of exports it reduces the possibility of selling more goods abroad, as well as services, in the case of tourism” Lizard replied.

Likewise, Harold Vásquez specified that both the COVID-19 pandemic and the Russia-Ukraine war are two phenomena that have affected the Dominican Republic and the rest of the world. “The Pandemic had its effects in 2020, the tourism sector and exports fell, there was a devaluation in the first months of the crisis that was later corrected and the economic sectors have recovered to pre-pandemic levels. The Russia-Ukraine crisis, as both countries are important producers of raw materials, what has come is to add inflation to that phenomenon that we already had since 2021 due to the dislocation of supply chains”, he pointed out.

Vásquez, who is the editor of INTEC's Science and Economy magazine, pointed out that, although it is true that raw materials or so-called commodities have increased quite a bit, in the last month they have shown a decrease in prices in general. Also, Vásquez pointed out that the Central Bank has been proactive, taking measures with its policy rate since November of last year, so inflation in the Dominican economy is projected to return to its target range in the medium term, which is confirmed. in the recent review of Article IV by the International Monetary Fund.

What is poverty?

When analyzing poverty, Magdalena Lizardo affirmed that poverty is a lack of means, as well as the human capital to get ahead. She even said that there are poverty traps that make it hard for people to get out of that state.

In this sense, Lizardo believed that in order to get out of poverty, a perspective that addresses the elements of an individual nature is necessary, that people find that a life project based on work is possible, but also with macroeconomic visions that allow families access resources that allow them to be useful and productive.

On his side, Carlos Ramos specified that poverty is nothing more than the lack of opportunities. "The lack of opportunities that poor people have limits them from getting out of poverty, it is a very complex issue that must be approached from multiple aspects," he said.

Harold Vásquez indicated that poverty is the lack of resources, however, he considered that poverty has been declining worldwide, at different levels, in the last century due to technological progress and increased productivity. Also, Vásquez pointed out that in the case of the Dominican Republic, the progress in reducing poverty indicators in the last two decades stands out. In this regard, Medina considered that, to overcome poverty, the programs cannot be the same for all countries, but must be designed and implemented according to the contexts, and recognizing that each social program is perfectible.

In the meeting attended by students of the Economics career, the professionals analyzed issues related to inflation, economic growth, the subsidy to the electricity sector, among others.

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