Retail inventories won’t be included in tax reform bill
SAN JUAN – The Puerto Rico Tax Reform bill will be passed in the coming days without the current tax on retail inventory but will include a “mention’ of a tax on video-lottery terminals, officials announced Monday after meeting.
Gov. Ricardo Rosselló Nevares met Monday with House Speaker Carlos “Johnny” Méndez and Senate President Thomas Rivera Schatz, as well as the chairs of the respective chambers’ Treasury committees, Antonio Soto and Migdalia Padilla, to discuss the details of the tax reform bill. Treasury Secretary Teresita Fuentes was among the other officials who participated in the meeting.
“We cannot eliminate that funding municipalities receive for two reasons: One is because they are used for their operational expenses and another portion guarantees loans. Therefore, we cannot cut off that income they receive. That is why a committee was created that includes mayors who have submitted several proposals. We want to see them, model them and establish if they are viable or not. That is why it is going to be approved in a separate bill. Our urgency now is the Tax Reform,” said Méndez Núñez about the tax on stored inventory, which will be considered separately.
“The issue with the slot machines is that, the way it is designed, no one can really establish how much revenue can be collected. So, among the precautions…it is part of what we are going to discuss,” the Senate president said.
A meeting is slated for Thursday to review the revenue models.
“If on Thursday night everything is fine, then we would be presenting it next week to our colleagues in the House and the Senate, to approve it the following week,” the speaker added.
“Why is it going to be approved simultaneously? Because since the discussion has been simultaneous and we have shared the information, as soon as the House approves it, it would be approved by the Senate the next day,” Rivera Schatz said.
The Incentives Code also will not be voted on, although some benefits will be eliminated to achieve that the bill be neutral in terms of Treasury revenue.
“We have $209 million that we have to replenish stemming from the Executive’s proposal and we certainly have to look at each of the changes proposed in the Legislative Assembly to guarantee to the people that this will be neutral,” said the secretary of Public Affairs, Ramón Rosario Cortés.
Rosario Cortés said the incentives to be eliminated within the Tax Reform have yet to be identified. There is also no certainty about a reduction to the sales and use tax on prepared food. La Fortaleza proposed that the reduction apply only to meals paid with credit and debit cards. The legislature wants to extend the cut to cash payments as well, which would change revenue estimates.
“Those are some of the numbers we’re going to be modeling,” Rosario Cortés said.
“What our vision is, and perhaps allocations can be made for other things that also need funds, such as the Police, servicing the Vieques and Culebra vessels, emergency transportation,” the speaker had said Monday when he arrived at the governor’s office, La Fortaleza.
When asked whether the revenue could cover as much, he replied, “Yes, it’s the same as what happens with casino slot machines, that one part goes to the University of Puerto Rico and another part goes to address other issues.”
The governor said he would like the gaming revenue to be used for farming incentives and paying public employees’ year-end bonus, known as the Christmas bonus.
Regarding other alternatives to replace the municipal revenue that would be lost were the tax on retail inventory to be eliminated, the speaker said the mayors are who will present the alternatives.
However, the Senate’s president does not believe the revenue would be sufficient.
“The $160 million that is said could be generated will take a while. And we are looking carefully at that,” Rivera Schatz said.
Both legislative leaders reiterated that a new tax will not be passed to replace the inventory tax.