Governor Ricardo Rosselló Nevares. (GFR Media) (semisquare-x3)
Governor Ricardo Rosselló Nevares. (GFR Media)

While yesterday, the Legislature suggested new amendments to the tax reform proposed by La Fortaleza, Governor Ricardo Rosselló Nevares warned that any initiative that is not in line with the original nature of the bill should be addressed on in another legislative measure.

Specifically, Rosselló Nevares indicated that the new Internal Revenue Code that he proposed does not alter the tax created by Law 154 - which affects international manufacturing companies - as proposed by Senate President Thomas Rivera Schatz. The Executive branch had already advanced a similar argument facing the idea of eliminating the tax item on movable property that applies to inventories.

"I think that these other initiatives, which are not part of the main ones, should be considered in another bill," Rosselló Nevares said at a press conference in Guaynabo.

According to the governor, the legislation he proposed in April - and which has not been approved yet - sought a reduction in the consumption tax on prepared foods, the elimination of the tax on transactions between businesses, restoring work credit and the redistribution of the contribution for the income of individuals and corporations.

 However, yesterday, legislators insisted on the elimination of the tax the inventories, an item that mainly goes to municipalities bank accounts.

 Antonio "Tony" Soto (PNP), chairman of the House Finance Commission, insisted that changes to the tax reform - including the elimination of tax on inventories - should be approved by the Legislative Assembly this month.

"This is going to be approved in the House and Senate as well as changes to the tax on inventory tax," he said, when asked if Rosselló Nevares would be in a position to sign the reform into law.

"I believe that the tax model that we are going to approve will be beneficial for Puerto Rico," he insisted, ensuring that its content was discussed with the Oversight Board.

 He did not specify if these conversations took place after the Secretary of the Treasury, Teresita Fuentes, warned in an interview with El Nuevo Día that the reform would not be endorsed by the fiscal entity if government annually revenues change. 

Soto said that yesterday, in a meeting between the House and Senate financial teams they reviewed "item by item" the amendments that would be approved.

"We are focused on reducing rates to individuals," he said, explaining that those who would benefit the most will be citizens with income between $ 45,000 and $ 120,000. This sector represents 9 percent of those who report some type of income in Puerto Rico, according to the estimates of the 2016 Census Community Survey.

"Everyone improves compared to what the governor submitted," Soto said.

It compensates the decrease in revenues to the Treasury, with a "not so aggressive" reduction on the rates paid by corporations, said Soto.

To questions from El Nuevo Día, he said that the tax on foreign companies will remain intact, contrary to what Rivera Schatz proposed.

Meanwhile, the legislator said that next week he will meet with six mayors to discuss the substitution of the inventory tax. He explained that according to the numbers initially received by the Municipal Revenue Collection Center (CRIM, Spanish acronym) the annual figure was  $ 168 million. That number was adjusted by the mayors to $ 260 million and the new CRIM estimate shows another number: $ 219 million, said Soto.

 "We want to refine the information to look for the number that we are going to substitute and find the methods substituting the inventory tax," he said.

Soto insisted that this tax would be replaced with the funds from the so-called legalization of slot machines. This would produce about $ 162 million, considering $ 20,000 machines paying the tax and a part of the money collected by the machines after the payment of prizes. The difference between $ 219 million and $ 162 million would be achieved "with other small things," Soto said.

The legislator said that the work credit would be maintained as the governor proposed, totaling an annual government investment of $ 204 million.

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