Friday, January 19, 2018

Puerto Rico governor to try to prevent passage of federal tax reform

By on December 15, 2017

SAN JUAN – After learning that Puerto Rico would not receive special treatment in the proposed federal tax reform, Gov. Ricardo Rosselló Nevares said Friday that he seeks to stop the approval of the measure and called the actions of the Republican leadership in Congress as “hypocritical” and “inconsistent.”

“We’ll fight this until the end,” said the governor, who added that he will try to convince members of Congress, particularly in the Senate, not to pass the measure when it reaches the floor for a vote.

If the bill becomes law, Rosselló Nevares vowed to have the stateside Puerto Rican community actively involved in the 2018 midterm elections. “We’re going to be involved” in the midterm election process “so it is known that there are consequences here,” he said.

On Thursday, a committee composed of members of the U.S. House and Senate agreed to continue treating U.S. manufacturing corporations that do business on the island as foreign. The so-called controlled foreign corporations, or CFCs, would be subject to a 12.5% tax, if the proposed reform were approved in its most recent version. The Rosselló administration lobbied for exempting CFCs operating in Puerto Rico from this tax.

Gov. Ricardo Rosselló (File / CB)

The governor made the statements at a press conference in La Fortaleza, along with New Jersey Governor-elect Phil Murphy, who also lambasted the tax reform for the effect it would have on his state and Puerto Rico.

Murphy, who arrived in the island Friday, said it is important that the proposed reform is not implemented, that Puerto Rico is granted the funds needed for recovery after hurricanes Irma and María, and that the relationship between the financial control board and the elected government improves. If all this takes place, there would be no jurisdiction in the U.S. “with greater upside than Puerto Rico,” Murphy said.

Rosselló Nevares also said the government’s fiscal plan, which must be delivered by Dec. 22, will be significantly affected if the proposed changes to the tax system at the federal level are enacted.

“It’s a huge blow for Puerto Rico,” said the governor, pointing to local government revenue and long-term economic growth projections as two elements that would suffer most in the fiscal plan as a result of the reform.

His administration has said that if the measure were approved, it would have an adverse impact on 50% of the gross national product, 30% of the government’s revenue and more than 250,000 direct and indirect jobs.

The conference committee is expected to reveal the details of the most recent version of the proposed reform Friday and the measure could go to a vote in both chambers as early as next week.

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