Wednesday, October 18, 2017

Treasury Chief-designate Evaluates Lowering 11.5% Sales Tax

By on January 4, 2017

SAN JUAN — Treasury Secretary-designate Raúl Maldonado said Wednesday that the new administration of Gov. Ricardo Rosselló Nevares is evaluating whether to reduce the 11.5% sales and use tax (IVU by its Spanish acronym) for the remainder of 2017.

Treasury Secretary-designate Raúl Maldonado

Treasury Secretary-designate Raúl Maldonado

The remarks about the government’s plans came about while the secretary-designate was giving details about the upcoming period of back-to-school sales, in which IVU taxes will not be charged on certain items bought during January 4-5.  Some of the articles that will be exempt from paying IVU include school uniforms and all manner of school supplies.

“We believe that these measures will provide relief to taxpayers in the short term, but we really want something that is larger in scope,” said Maldonado referring to the back-to-school IVU moratorium, adding that the Treasury Department will have officials on hand to ensure the moratorium takes effect during this period.

“We want to reevaluate the IVU for the whole year and lower it to reduce the burden on all articles, not just school supplies,” he said during a radio interview (NotiUno).

Maldonado explained that the 11.5% IVU rate mainly seeks to balance the budget and increase government revenue. “What would be ideal is for the people to have more money available for their mortgage payments or to save for their children’s university studies. We are aiming to find payment options for those people who are not in the system so we can alleviate the burden for those who are,” he noted.

Section 4030.20(b) of the 2011 Puerto Rico Internal Revenue Code and its accompanying circular letters go into detail as to which items are exempt from the IVU for the two-day period. Among these are commonly used school items such as pencils, pens, notebooks, erasers, markers, index cards, scissors, protractors and manila envelopes. Other items include digital storage devices such as flash drives and compact discs, as well as art supplies and even musical instruments and equipment. A more recent ruling included e-books required by a school or university curriculum as IVU-exempt items.

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