Sunday, October 21, 2018

House Committee Chairman defends taxing gaming machines instead of inventories

By on October 11, 2018

SAN JUAN – The chairman of the Puerto Rico House Treasury Committee, Antonio Soto confirmed Thursday that the proposal to tax slot gaming machined will be included in the tax reform bill, the revenue from which would be used to substitute what municipalities would stop receiving as a result of the elimination of the tax on retail inventory.

The elimination of the inventory tax is being considered in a separate measure to the tax reform.

“We are ready to approve a new, improved tax model that will benefit the people, the people of Puerto Rico,” Soto said in a radio interview (WKAQ). We will address both issues [tax reform and eliminating the inventory tax] in two separate bills that will be approved simultaneously.”

He further said that the revenue “will be used for municipalities, as a mechanism to substitute the income from the tax on inventory that exists today and that is detrimental to the economy. What was agreed on is that a separate bill will be addressed, and we are focused on eliminating that tax.

“The wording [that should be used] is ‘substitute’ it. For the mayors, it would be to substitute the revenue. It would be eliminating that tax and substituting that income for the mayors.” He then specified that the funds would go to the Municipal Revenue Collections Center (CRIM).

The lawmaker explained that the proposal includes the “regulation and formalization of the industry, which will be in the hands of the Gaming Division of the Tourism Company of Puerto Rico and not the Department of the Treasury as was customary.”

He added that a background check will be required of both the owner of the machines and the owner of the establishment where they are placed.

“The machines must be integrated into an electronic system that will allow the money put into each machine to be registered. The division of the government that is going to oversee this operation will be able to see on a monitor what each machine produces,” he said.

Regulation will begin immediately after the legislation is enacted.

Soto estimated nearly $160 million in revenue from the 40,000 to 50,000 slot machines on the island. An additional cap of 20,000 machines will be established, apart from those already authorized for the Camarero Racetrack.

The lawmaker reacted to claims by the Hotel and Tourism Association, whose directors sent a letter to the U.S. Attorney General Jeff Session, alleging that the machines do not comply with federal laws to prevent money laundering.

“What we are saying is this commercial activity be regulated, formalized. That it be put on the table, be under the control of the government of Puerto Rico and produce money that reverts to service for the people without it being an additional tax. That’s doing things right. Any other thing [would be] looking out for particular [special] interests,” Soto said.

“The government of Puerto Rico and the Legislative Assembly are not here to watch over the interests of a particular sector. We are here to achieve the sustainability of the government of Puerto Rico in a stable, responsible manner. To provide the Treasury with the resources it needs without having to massacre or place additional tax burdens on the people of Puerto Rico,” the lawmaker stressed.

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