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Senate president says tax on inventories to remain in reform

By on October 10, 2018

Cayey Mayor Rolando Ortiz, left, and Senate President Thomas Rivera Schatz, third from left, attend the Senate’s Municipal Summit. (Courtesy)

SAN JUAN – Puerto Rico Senate President Thomas Rivera Schatz said a new and improved version of tax reform will not repeal the inventory tax as business sectors have requested but will tax slot, or adult gaming, machines.

He also said that neither a proposed hike in the city business tax, known as the patente in Spanish, nor changing the current sales and use tax to a value-added tax will be part of tax reform.

“We agree with the House of Representatives that the repeal of the inventory tax will not be discussed,” Rivera Schatz said before going into a meeting of 41 island mayors as part of the Senate’s Second Municipal Summit.

The agreements were reached at a meeting with House Speaker Carlos Méndez and the chairs of the legislative Treasury committees, Sen. Migdalia Padilla Alvelo and Rep. Antonio L. Soto Torres.

In statements, Rivera Schatz said the Senate will not pass legislation that eliminates resources or puts a greater burden on towns.

Rolando Ortiz, who is president of the Mayors Association, which groups the minority Popular Democratic Party heads of municipalities, and Carlos Molina, who presides the Mayors Federation of the incumbent New Progressive Party, urged the state government not to burden towns further because their fiscal states are fragile.

“The greater the inefficiency of the central government, the greater the responsibility of the municipal governments…and that means a significant expense for all of us,” Ortiz said.

A few days ago, Rivera Schatz and Méndez said in the town of Ceiba that the tax on stored retail inventory should be part of tax reform, going against a request made by Gov. Ricardo Rosselló that the tax should be discussed separately from tax reform.

Businesses have for years requested the elimination of the tax on commercial inventory to facilitate having more products available in case of emergencies or natural disasters, the lack of which was made evident in the aftermath of Hurricane Maria last year.

Given the Puerto Rico government’s critical financial situation, especially municipalities’, the Legislature’s response to the requests was to propose increasing the municipal license fee, or patente, to compensate municipal governments for income lost from the inventory tax revenue. The idea, however, is opposed by businesses and mayors.

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