Puerto Rico Treasury revenue exceeds estimates in first 5 months of fiscal year 2021
Delayed taxes, federal aid buoy collections; total actual revenues lower than previous year
SAN JUAN – Driven in part by postponed tax collections and an influx of federal reconstruction and pandemic aid, Puerto Rico’s net general fund revenue during the first five months of fiscal year 2021 exceeded lowered estimates by 21 percent, the commonwealth’s Treasury Department reported.
Revenues between July and November reached $4.01 billion, surpassing estimates by $698.1 million, Treasury Secretary Francisco Parés Alicea said in a press release issued late Tuesday. The figure is actually 5 percent lower than the $4.22 billion in net general fund revenues the government raked in between July and November of 2019 – the first five months of fiscal year 2020.
In fiscal year 2020, which ended June 30, net general fund revenue reached $9.29 billion.
The July-November revenue figure includes $479.3 million in revenues from tax payments that were due between the months of March and June, but whose collection was postponed to the following fiscal year to mitigate the effects of the Covid-19 pandemic.
Parés said that revenues from the sales and use tax (IVU by its Spanish initials) and other consumer taxes have shown an upward trend since the beginning of current fiscal year 2021 on July 1.
“Among the factors associated with this performance are the influx of funds of local and federally approved programs to mitigate the pandemic, the disbursement of funds for reconstruction work,” the Treasury Department press release said, adding that tax compliance could also have been improved by the massive shift to electronic payment methods.
The November revenues, totaling $656.1 million, set a record for the month, the Treasury chief said, noting that November’s tax collections reached $127.8 million, or 24 percent higher than “the monthly projection based on the budget method.” He attributed this to the payment in mid-October of the annual debt service of about $440 million to Puerto Rico Sales Tax Financing Corp. (Cofina by its Spanish acronym) bondholders, leaving the balance of the 5.5 percent portion of IVU collections available for the commonwealth general fund until the end of the fiscal year next June 30.
In fact, the IVU was the best performing tax category during the July-November period of the current fiscal year, Parés said, stressing that IVU collections of $743.3 million surpassed the year-ago period’s collections by $226.1 million or 43.7 percent. During this period, postponed IVU tax collections amounted to $36 million.
IVU collections of nearly $230 million in November exceeded estimates by $96.1 million or 72 percent. Compared to IVU revenues in November 2019, collections increased by $101.2 million or 79 percent.
Corporate income tax collections during the July-November period totaled $718.8 million, exceeding projections by $91.6 million, but were off by 46 percent compared to the $1.33 billion collected during the same period in the previous year. The $718.8 million figure includes $245 million in corporate taxes that were postponed from the previous fiscal year.
Individual income tax collections during the July-November period climbed to $847.1 million, surpassing by 10 percent the $770.6 million collected during the same period in the previous fiscal year. The $847.1 million figure, which includes $198 million in deferred tax collections, exceeded estimates by $64.3 million or 8 percent.
For the month of November, individual income tax revenue reached $146 million, surpassing estimates by 38 percent and November 2019 collections by 15 percent.
Moreover, motor vehicle excise tax revenues of $227 million during the July-November period represent a 24 percent increase compared to the $182.9 million collected during the same period in the previous fiscal year. Such excise tax collections of $50.1 million during November exceeded projections by $27.6 million or 123 percent.
Excise taxes on tobacco products collected $40.1 million during the July-November period — a 39 percent increase over the $11.3 million collected in the year-ago period.
Revenue from Act 154’s 4 percent excise tax on foreign controlled corporations (CFCs), which has provided anywhere between a fifth and a quarter of the commonwealth’s general fund net income since it was instituted in 2010, plunged 19 percent to $619.4 million in the July-November period, compared to $765.6 million in the year-ago period. Still, Act 154 revenues were $72.9 million above estimates for the period.
“It is important to note that during the July to October period there was compliance with the Financial Oversight and Management Board’s requirement to present revenues according to the cash basis accounting method and accrual method,” Parés said. “This requirement does not include the month of November or the next months.”