(GFR Media)

Two of the main reforms in the fiscal plan could negatively affect the already diminished birth rate in Puerto Rico and continue to affect the demographic transformation on the Island.

According to three interviewees, the proposal to reduce vacation and sick leave to seven days and the elimination of the dependents deduction in the tax reform join the economic and social deterioration picture of Puerto Rican families.

"The part of the labor reform is what worries the most because people need time for their children," said demographer Raúl Figueroa.

Since last year, the number of deaths in Puerto Rico exceeds births.

According to Figueroa, if the dependents deduction of the income tax return is eliminated, the situation could particularly affect people with several dependents.

"I do not believe that the demographic impact is being considered when the Government and the Board make decisions pushing policies that will affect an already vulnerable population," said Figueroa.

"We will have to see how they mitigate that (the elimination of the dependents deduction). They allege that despite eliminating deductions, contributions will be lower," said the demographer.

Yesterday, the labor reform would have been subject of negotiations between the Board and Governor Ricardo Rosselló Nevares as part of the process to finally certify the budget.

For the Treasury, the dependents deduction balances out by the Earned Income Tax Credit (EITC) and lower tax rates. However, the EITC will only benefit taxpayers with income of $ 42,000 or less.

For economist Argeo Quiñones, like other austerity measures proposed, eliminating the dependents deduction "goes in the opposite direction to what the moment demands".

According to the UPR Economics professor at Río Piedras, the tax reform issue "seems to have become a tradition" for each administration, promising a relief that does not materialize.

"The crisis has dramatically reduced the income that goes to employees compensation, contrary to what is happening with income from property paid to residents and abroad," said Quiñones.

"An ideal contributory system would provide more resources for development and compliance objectives with legitimate public debt obligations. This system must be equitable - both vertically and horizontally - and promote -or dissuade- those behaviors that society determines in consensus and be less complex," said Quiñones.

"The government, instead of seeking to minimize the crisis regressive redistributive effects, is exacerbating them with this labor reform based on myths and legends," he added.

In the opinion of economist José Alameda, Puerto Rico will not see the positive effects of the structural reforms proposed because it is an economy in which demand is scarce. Therefore, companies do not have enough incentives to invest or create jobs.

"Children and elderly dependence will be present even if you have fewer marginal benefits, shorter leaves or no Christmas bonus,", said Alameda, highlighting the gap between the main bets of the fiscal plan to transform the economy.

He highlighted, for example, that in the past months, the Board relied on external figures projections not familiar with the economy of Puerto Rico and databases such as passengers movement to make assumptions without validated and reliable data.

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