The challenges of designing a fair tax system

Every tax system must reconcile two goals that often pull in different directions: collecting enough revenue to finance the state and distributing the burden fairly. Governments also want to avoid discouraging investment, jobs, saving and production. That tension means tax systems require periodic review, regardless of how long individual taxes have existed.

A familiar saying holds that “an old tax is a good tax,” because long-established levies often have administration and compliance procedures that taxpayers understand. But age alone does not make a tax efficient or fair. The relevant question is whether it still fits the country’s economic and social structure.

The issue has taken on renewed importance in the Dominican Republic following the enactment of Law No. 30-26 on Measures for Economic Growth, Tax Simplification and Mitigation of the International Crisis. Promulgated on June 18, 2026, the law modifies provisions of the Tax Code, including rules on income tax, withholdings, advance payments, certain property taxes and other fiscal obligations.

The country’s revenue structure relies heavily on indirect taxes and consumption levies. In 2025, the Directorate General of Internal Taxes collected RD$913.7751 billion. ITBIS contributed RD$216.3894 billion, corporate income tax RD$200.0775 billion, personal income tax RD$133.7501 billion and property taxes RD$61.9199 billion. The real estate property tax paid by individuals, known as IPI, contributed RD$6.0321 billion.

Foreign-trade taxes have declined in relative importance. Internal taxes made up 91.6% of collections by the main revenue offices in 2025, compared with 8.4% for taxes linked to foreign trade. The article presents this shift as part of the country’s wider move toward greater trade openness.

“

An old tax is a good tax.