The analysis of the Incentive Code proposed by the government began yesterday with questions about the cuts to the benefits that agricultural and manufacturing companies would receive, if the bill is approved as submitted.
Many of the changes that the legislation entails were not entirely clear yesterday, because, although on Monday, Governor Ricardo Rosselló Nevares announced that he had submitted the bill, he did not publish the proposal immediately. It was not until the afternoon that the initiative circulated in the Legislative Assembly.
"This is an extensive and voluminous bill, and it cannot be evaluated in isolation, since it has a large number of incentives that we are studying in order for it to be balanced and goes together with the New Contributive Model, and to be applied to the budget," said Representative Antonio “Tony” Soto, chairman of the House Finance Commission.
Focus has initially been concentrated on the impact that the measure would have on the agricultural industry and manufacturing, said Migdalia Padilla, Senate Finance Committee Chairwoman.
"I understand that there are not many of the agricultural incentives. We want to see what's new to see what happens with that industry and if it compensates for the impact in some way," said Padilla.
The PNP senator estimated that the bill would be considered first in the Senate, and that its formal discussion would be in the hands of the commission that she presides over.
Meanwhile, Popular Democratic Party (PPD) House minority spokesman, Rafael "Tatito" Hernandez, warned about the alledged extraordinary powers that the measure delegates to the Secretary of Economic Development and Commerce.
Hernández mentioned that matters such as the imposition of tax rates on companies or the requirements of economic development that beneficiaries must meet are at the complete discretion of the Executive Branch official.
"They intend for an absolute delegation of the details and management of all incentives to an official, either by decree or by regulation. It is a contradiction to what has been told to Puerto Ricans: that this is to provide rationality and objectivity to incentives," said Hernández.
The bill, according to its explanatory memorandum, proposes a system for evaluating the costs and benefits of incentives that, in addition, seeks to facilitate the oversight of corporate beneficence, especially in those cases in which goals are required, such as the creation of jobs or investment of capital.
This oversight will also be partly done through the release of annual reports regarding the administration and performance of the incentives.
In total, the proposed code reviews some 58 laws or programs that establish incentives to boost different areas of the economy. According to what has been said in the past by the head of the DDEC, Manuel Laboy, these incentives cost the State about $ 600 million a year.
There are another 18 incentives that address social issues. These are not affected by the bill.
"All changes established by this Incentive Code are prospective and do not affect companies or individuals with decrees, credits, or incentives granted prior to their approval," says the measure.
The bill clarifies that some benefits, such as those associated to the export of products manufactured on the island, those that promote foreign investment and those that promote the cruise industry would not be altered.
In total, it seeks to reduce by about $ 300 million the investment or what the government stops receiving in revenues with these incentives. This is a figure similar to that outlined in the plan certified in April by the Oversight Board.
The fiscal plan establishes reductions in incentives for manufacturing, tourism development, the film industry, and housing construction, urban centers redevelopment, hospitals, conservation easements and agriculture.
In the same way, the proposal is to reduce the rum tax to the producers to Puerto Rico´s rum producers.
The new fiscal plan proposes a reduction of $250 million for fiscal year 2020 in government tax incentives investment.
With these savings, the government seeks to compensate part of what it would stop receiving with the tax reform, which is under the consideration of the Legislative Assembly since last month.
💬See 0 comments