Saturday, January 28, 2023

Imports show inflation boosted Customs collections

The record collections that the State registered through the General Directorate of Customs (DGA) during 2022 were based on the impact of inflation on the value of imported goods. In fact, the level of collection, although high, was below the proportion in which imports of taxed goods grew.

In 2022 Customs collected RD$230,922.6 million, which implies an increase of 20.2% over the RD$191,990.5 million that entered in the previous year 2021.

However, this proportional increase in collections is below the proportion in which imports of goods increased during the same period.

Statistics from the DGA itself indicate that in 2021 imports totaled US$24,485.5 million, while for last year they increased to US$31,063.5 million, for an increase of 26.8%.

Ideally, collections should grow at a rate that is almost similar to or higher than the level of increase in imports, but this was not the case in this case, since Customs revenues were below the imported level by 6.6 percentage points.

The figures show that the increase in collections was not due to greater efficiency in terms of reducing tax evasion or other controls, but rather to the effect of inflation (price rises) on imported goods.

The foregoing is explained as follows: if an imported product costs 100 dollars and pays a 10% tariff, then the income for the State in taxes would be 10 dollars. If the same product increases in price to 150 dollars, then, with the same tariff of 10%, the income of the State would be 15 dollars, which would imply a 50% increase in collections, if there has not been more than an effect inflationary at tax time.

This is what happened last year and should have been more effective, since the values ​​of imported goods grew by 26.8%, while collections did so by 20.2%. The proportion should have been the same or higher, to demonstrate efficiency.

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