Fiscal board expecting Puerto Rico gov’t to explain tax reform reductions
SAN JUAN – The Financial Oversight and Management Board for Puerto Rico insisted Monday that the proposed tax reform must be revenue neutral and that it has not been made aware of funding sources to offset proposed tax decreases.
The board’s remarks came only hours after La Fortaleza announced an agreement over tax reform had been reached.
“The Oversight Board is aware that the government appears to have reached a compromise to adjust Puerto Rico’s tax code. The certified Fiscal Plan is clear in stating that any reforms to the tax system must be revenue neutral with specific offsetting revenue measures of a sufficient amount identified in the enabling legislation,” the board said in a statement.
Each tax measure must also include “confidence building elements, such as behavioral adjustments and reasonable capture rates,” the board said, adding that To date, the Oversight Board has not received a list of specific payfors that will be used to offset proposed decreases in tax revenue. The legislature also added several new provisions to the draft bill that, without further information, appear inconsistent with the certified Fiscal Plan,” the statement reads.
The board added it expects to receive “the list of payfors to assess whether the legislation is consistent with the fiscal plan or whether it requires further amendment.”
According to statements provided by La Fortaleza, the agreement provides the following:
1-A “Tax credit type” incentive of 5 percent for all individuals who file income tax returns.
2-A reduction of the corporate tax to 37.5 percent from 39 percent.
3-The elimination of the business tax for taxpayers who make $200,000 or less in revenue.
4-The reduction of the sales and use tax on prepared foods to 7 percent.
5-The payment for the registry of 20,000 to 25,000 slot machines that must generate $160 million to be distributed as stated in the fiscal plan.