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Tax Bill Could Undermine Puerto Rico’s Recovery, Governor Says

By on December 19, 2017

“There is an opportunity to set things straight, to give Puerto Rico an opportunity and to eliminate this just weird application of the base-erosion provision to a jurisdiction of the United States,” Rosselló said. (Felipe Torres/CB)

By: Roberta Rampton

Puerto Rico Governor Ricardo Rosselló on Tuesday urged the U.S. Congress to address issues in the Republican tax bill that he said would harm the island’s economy, which is already reeling from the devastation of Hurricane Maria and years of financial hardships.

A provision in the tax bill that is meant to keep companies from shifting profits to other countries to avoid paying taxes would affect Puerto Rico because the U.S. territory is considered a foreign jurisdiction for tax purposes, even though its 3.4 million residents are American citizens.

The tax bill was expected to win final passage in the Republican-led Congress on Wednesday.

At a news conference with two members of Trump’s Cabinet who visited the island to assess the hurricane’s impact – Homeland Security Secretary Kirstjen Nielsen and Housing and Urban Development Secretary Ben Carson – Rosselló said the provision designed to prevent shifting of profits – a process known as “base erosion” – amounts to a new tax that Puerto Rico cannot afford.

“There is an opportunity to set things straight, to give Puerto Rico an opportunity and to eliminate this just weird application of the base-erosion provision to a jurisdiction of the United States,” Rosselló said.

He urged lawmakers to attach an exemption from the tax for Puerto Rico to a year-end spending bill they are writing.

Homeland Security Secretary Kirstjen Nielsen and Housing and Urban Development Secretary Ben Carson visited the island to assess the hurricane’s impact. (Felipe Torres/CB)

Rosselló also said Puerto Rico’s Medicaid funding could run out as soon as February, leaving millions of residents without health insurance coverage, unless Congress acts soon.

Even before Maria laid waste to the island three months ago, Puerto Rico was contending with $72 billion in debt. Rosselló has asked the U.S. government for a total of $94.4 billion in aid, including $31.1 billion for housing and $17.8 billion to rebuild the ruined power grid.

About 70 percent of Puerto Rico’s power grid – as measured by its peak use – is operating, the government has said. The U.S. Army Corps of Engineers projects 95 percent of the grid will have power by the end of February, but it will take until the end of May for power to resume on the rest of the island.

House of Representatives Republicans this week unveiled an $81 billion natural disaster aid package intended to help Puerto Rico and states such as Texas that have been hit by hurricanes, as well as California, which is grappling with wildfires.

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