Proposed Puerto Rico incentives law impacts agriculture, the young
SAN JUAN – The farming industry and young people will be hurt by proposed new industrial incentives submitted to the Puerto Rico Legislature this week.
That is because among the many incentives that will be repealed are some that are aimed at helping these sectors. For example, the bill would eliminate Act 42 of June 2, 1971, or the Law of the Annual Agricultural Worker’s Bonus, and Act 46 of Aug. 5, 1989, the Act to Establish the Wage Subsidy Program for Eligible Farmers, as well as Act 225 of 1995, the Law of Agricultural Tax Incentives of Puerto Rico.
The bill would also repeal Act 26 of 2008, known as the Financing Program for Research and Development of Agricultural and Food Technology Law, and would also repeal Section 1033.12 of Act 1 of 2011, known as the Internal Revenue Code for a New Puerto Rico, to eliminate 90% deduction to the net income of agricultural business.
On the other hand, the legislation would repeal Act 464 of 2004, known as the Juvempleo Program Law, which ensures jobs for young people, and Articles 5, 6 and 7 of Act 73 of 2014, which would have the effect of eliminating a fund that provides services and therapy to special education students and another fund to promote employment.
The Business Incubator Act, which helps young entrepreneurs to start businesses, would also be repealed.
The justification for repealing many incentive laws is to achieve nearly $300 million in savings that will be used to pay for tax reform on the island.
The Economic Development and Commerce Department (DDEC by its Spanish initials) said in the measure that it analyzed laws, economic principles, the methodology and the results of all the economic incentives that have been granted in Puerto Rico.
“The analysis shows that there are currently around 76 laws or programs that promote investment through the granting of incentives. Of the total, 58 stimulate economic activity and 18 serve social needs. According to the available data, it was determined that the programs identified as economic represent a total fiscal cost in excess of [$7.46 billion], of which eighty-one percent (81%) is considered an opportunity cost,” the bill reads.
Opportunity cost is defined in the law as income the government stops receiving for the preferential rates granted in the incentives. The government does not budget their cost.