Puerto Rico Has Highest Proportion of Tax Expenditures Globally
Study by Espacios Abiertos Reveals Cost of Economic Incentives is Rising
The fiscal or tax expenditures in Puerto Rico this year amount to $23.3 billion, a figure that is twice the annual budget allocated to the general fund. On the one hand, at a global level, Puerto Rico is one of the jurisdictions that proportionally offers most incentives, and in turn, is the jurisdiction where the benefits provided by these incentives are the least accounted for, according to a study by Espacios Abiertos, a nonprofit government watchdog.
The research highlights that almost half of these special tax deals continue to be contained in the socalled “hidden budget,” given that it is a fiscal spending for which details are not known.
The study, “Fiscal Expenditures in Puerto Rico: Internal Challenges and Global Perspective,” revealed that Puerto Rico leads 29 jurisdictions in the United States and 92 countries globally in terms of the fiscal impact of economic incentives, or “tax privileges,” with regard to the size of its economy, compared to its gross domestic product (21 percent) and gross national product (31 percent).
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