Treasury Department Raises $9.2 Million Less in December, but Exceeds Expectations
Net income to Puerto Rico’s general fund in December 2015 totaled $844.8 million, or $9.2 million less than the same month last year, representing a decrease of 1.1%. However, revenues were $2.5 million higher than expectations.
In 2015, about $9.101 billion was raised for Treasury Department coffers, an increase of $267.3 million, or 3% more, than in 2014. In the first half of fiscal 2015-2016, nearly $3.9 billion was raised, some $140.3 million more than the same period for the previous year, but $21.5 million less than the amount estimated in the original budget. Treasury receives about 60% of the original revenue estimate in the second semester of the fiscal year.
Treasury revised the original revenue estimate to $9.292 billion, a reduction of $508 million. The effect of this reduction will be noticed in the revenue of the second semester of the fiscal year, particularly in the last trimester, according to Treasury.
The revision is due to the fact the revenues have fallen short of what had been expected in three of the six months that have passed in the fiscal year. The increase in the sales & use tax (IVU by its Spanish acronym), which in July went from 7% to 11.5%, helped raise $1.1 billion, or $420.8 million more, for the July to December 2015 period.
IVU revenues in December increased to $215.4 million, some $93.9 million more than in December of last year.
“However, the monetary value of the amount subject to tax for both periods was similar. This means that even with a higher rate, the economic value of consumption remained at the same level. The behavior in consumption may be explained by various factors; first in economic terms with the reduction in cost related to fuels derived from oil, which increase the purchasing power of consumers. On the other hand, results may be attributed to the fiscalizing efforts related to the recent interventions with businesses that didn’t remit the IVU and the expansion of the tax base,” said Treasury Secretary Juan Zaragoza, while highlighting that these new efforts and strategies will continue.
Income taxes from individuals once again fell, for the fifth month in a row, in December by $5.4 million, or a 3% drop. In the first six months of the fiscal year, income taxes from individuals have fallen 13.2%, or $138.2 million less.
In December, corporations paid $231.2 million in taxes, which is 31.3% less than last year. This drop is attributed to the fact that last year’s numbers included the last estimated payment of the patente nacional, or gross receipts tax, which has now been eliminated. Between July and December, corporations paid $110.5 million less in taxes to Treasury.
Meanwhile, in the case of the amount retained to nonresidents, which include the payment on royalties for the use of patents in the manufacturing process, $141.2 million were received, or $62.8 million more than the previous year. This increase is mainly due to a special payment by corporations, related to an auditing adjustment by the U.S. Internal Revenue Service. In the first six months of the fiscal year, Treasury had received $12.8 million more of these taxes.
Some $78 million was received from taxes on foreign corporations (Act 154), which represents a decrease of 21.9%, or $21.9 million less. Revenues from this tax have decreased throughout four of the past six months. The general fund has received $848.7 million from this tax in six months, which is $9.1 million below the amount received for the same period last year.
Meanwhile, excise taxes on motor vehicles increased by 15.4%, or some $400,000 more. This is the second increase since the beginning of 2014. In the first six months of this fiscal year, revenues from the excise tax on motor vehicles have experienced a cumulative drop of $27.4 million, or a decrease of 19.6%. Treasury said this decrease is due to various companies that have claimed about $32 million in tax credits for the period.