Dominican Republic and Haiti: Country Studies

Dominican Republic and Haiti: Country Studies
most pressing needs in health, nutrition, sanitation, and infrastructure.
A medium-term strategy to address the country's
urgent needs for rehabilitation and economic development
also was supported by an IMF stand-by agreement. Economic
performance improved significantly under the EERP: real GDP
grew by 4.5 percent in fiscal year (FY—see Glossary) 1994-95
and the twelve-month rate of consumer price increases
declined to 30 percent from 40 percent in FY 1993-94. In spite
of a stronger than projected revenue performance, however,
the government deficit for FY 1994-95 was higher than contemplated.
The deficit may have resulted, however, from
higher expenditures on a job-training program and larger than
anticipated wage adjustments in the priority Ministry of Public
Health and Population and Ministry of National Education,
Youth, and Sports. As the government started to improve its
historically poor record of tax collection and exercise better
control over expenditures, it also managed to meet IMF
requirements to sign an Enhanced Structural Adjustment Facility
(ESAF) agreement in October 1996.
The government's role in the country's market-oriented
economy has been sharply reduced since 1987, when government
attempts to control prices or supplies were undercut by
contraband or overwhelmed by the great number of retailers.
Even when the government sets prices for such basic items as
flour and cement, consumer prices are governed by supply and
demand. Gasoline prices and utility rates, which are more
effectively regulated, are the exception to the rule — perhaps
because gasoline prices are required by law to be adjusted to
reflect changes in world petroleum prices and exchange rate
movements.
Because Haiti's tax system is inefficient, direct taxes amount
to only about 13 percent of government receipts. Tax evasion is
so rampant and so few taxpayers are registered with the tax
bureau (Direction Generale des Impots—DGI) that the government
has made improved revenue collection a top priority.
The DGI has a large taxpayers' unit that focuses on identifying
and collecting the tax liabilities of the 200 largest taxpayers in
the Port-au-Prince area, which are estimated to account for
more than 80 percent of potential income tax revenue. Efforts
are also being made to identify and register other taxpayers. In
addition, the value-added tax has been extended to include
sectors previously exempt, such as banking services, agribusiness,
and the supply of water and electricity. Collection remains
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