Federal Board Would Promote Economic Development for Puerto Rico
The U.S. Congress is working on drafts to create a federal oversight board that will not only impose limits on budget expenditures in Puerto Rico, but will also be able to make decisions to promote the island’s economic development, members of the Private Sector Coalition said Wednesday.
The Republican-dominated Congress is not opened to the idea of allowing Puerto Rico to benefit from Chapter 9 bankruptcy protection but it appears the entity will have a restructuring component, said Chamber of Commerce President José Vázquez Barquet, a member of the Coalition, which is comprised by dozens of business groups.
“How is it going to reconcile with making it democratic, that is a matter of discussion,” he said.
While fiscal oversight boards were appointed in cities like Miami and Washington D.C. to help bring the cities out of fiscal problems, the scope of the board’s powers vary. Congress appointed a board in Washington D.C. that oversaw the finances of the cities and had the power to override decisions of the mayor and city council. The board appointed in Miami by the state could not overrule the city commissioners, according to reports. The Michigan state government appointed an emergency financial manager for Detroit that had powers to liquidate assets and rewrite contracts.
The Coalition said it is insisting that the board should have the powers to impose economic development policies to prevent a repeat of the current fiscal crisis.
In response to questions from Caribbean Business, Ramón Pérez Blanco, president of the Puerto Rico Products Association, said it is not in Congress’ radar to extend the earned income tax credit to residents of Puerto Rico nor exempt the island from the maritime shipping laws.
Blanco says the coalition opposes legislation that would exempt Puerto Rico from the minimum wage.
On the other hand, the Coalition stressed that it will oppose more taxes in the island after local lawmakers reportedly said they are evaluating more taxes on foreign controlled corporations to ease the impact of the value-added tax going into effect in April.
The president of the Manufacturers Association said the government should not consider imposing more taxes to the most productive sector of the country, stressing that the manufacturing sector accounts for 48% of the island’s gross domestic product.
“We cannot continue to impose the main tax burden to the sector that contributes most to our island in multiple ways. Our leaders are proposing the imposition of taxes to those sectors that today fulfill their tax responsibility. This, without the slightest regard to the effect it would have,” he said.
Members of the Coalition are in Washington to meet with members of Congress to seek fiscal help for the Island. So far this year, they have met with more than 40 members of the U.S. Senate and House of Representatives.