Governor Vetoes Measure to Repeal VAT, B-to-B Increase
SAN JUAN – Following Gov. Alejandro García Padilla’s veto of a bill to repeal a hike to the business-to-business (B-to-B) tax and the transition to a value-added tax (VAT, or IVA by its Spanish acronym), Popular Democratic Party gubernatorial candidate David Bernier urged the Legislature to override the governor’s veto.
“I lament the governor’s decision. My call to the Popular Democratic Party majority and to the legislative minority is, just as they did before, to put the country’s interests over any other consideration and override the governor’s veto by passing this needed measure for Puerto Rico’s economic stability, a needed foundation to build true justice to our people,” Bernier said in a statement.
Earlier this month, the House and Senate passed the bill despite the governor’s threat of to veto it. The legislation derails the governor’s most significant tax achievement. The IVA was touted as the best alternative to reduce tax evasion because businesses had more oversight of tax collections.
The B-to-B, which will be raised to 10.5 percent from 4 percent on June 1, is expected to collect around $25 million. Lawmakers contend that tax reform should have been approved with tax relief and that it will hurt the taxpayers. They also said merchants are not ready for the change and worry about the backlash of the taxes on their electoral chances.
To override the governor’s veto, the House needs 34 votes from the 51 members. The Senate, which has 27 members, needs 18 votes. Both chambers have enough votes for a veto override.
“Puerto Rico must move toward the forefront of global trends in terms of tax justice. To combat injustice emanating from a system that punishes the worker for working, imposing taxes on their productivity, should be the guiding principle in our exercise of government. One is an accomplice of injustice when this is identified and not fought. The vetoed measure recognizes injustice and chooses to postpone fighting it,” reads a letter sent by García Padilla on Friday to the presidents of the legislative bodies.