Washington - Yesterday, the Puerto Rico Secretary of the Treasury, Raul Maldonado, presented his proposal for the tax reform before the offices of the US Senate, Resident Commissioner in Washington D.C., Jenniffer González, and the Administration of Federal Affairs (PRFAA).
"It's a critical legislation, and I wanted to present it in detail," said Maldonado.
Secretary Maldonado met with advisers to Democratic spokesman in the Senate Committee on Finance, Ron Wyden (Oregon), and to Democrat Bill Nelson (Florida), another member of that committee.
Then, in a room of the US House, he offered an informative session to Commissioner González, her advisers, PRFAA directors, Carlos Mercader and George Laws, as well as to the representative of the New Progressive Party (NPP) José Aponte and members of the Equality Commission who have held meetings in this city this week.
Under the new tax model that the government of Ricardo Rosselló has submitted before the Legislature, the expectations are that individuals and small businesses have benefits that amount to $ 850 million. To balance the loss of that income, Secretary Maldonado said that they will broaden the tax base and reduce incentives that were not efficient.
The presentation of the new tax incentive code is in the hands of the secretary of the Department of Economic Development and Commerce, Manuel Laboy.
Although Congress has questioned why the tax rates of individuals and corporations are lowered in the midst of the fiscal crisis and public debt, Maldonado explained that this is a "neutral" reform, as demanded by the Oversight Board in charge of the public finances of Puerto Rico.
"We were in conversations with the Board´s advisers for months. Each number that is there (in the legislation) was validated," he said.
Maldonado said that the reform under the consideration of the Island´s legislators seeks to adjust to the federal tax reform.
Although the chairman of the Senate Committee on Finance, Republican Orrin Hatch (Utah), has closed the door to, at least, reducing for Puerto Rico the rate of 13.1 percent on the intellectual property of the Controlled Foreign Corporations (CFC), Maldonado told El Nuevo Día that "we understand that there are still opportunities and we will continue to come (to Washington to push) on that".
"Under PROMESA, it is a crucial requirement that Puerto Rico has economic development. PROMESA law requires that it contains economic development tools, and the tax on intangibles (of the CFCs) takes away our competitiveness," he insisted.
However, as far as he knows, right now the Republican leadership of Congress does not plan to push forward a legislation that makes adjustments - many of them technical - to the federal tax reform, since the intention is to wait for adjustments to be made withinthe regulations approved by the US Treasury.
Any effort related to the 4 percent tax on CFC sales created by Law 154-2010 of the Government of Puerto Rico -which leaves about $ 1.8 billion per year to the Treasury- also depends on that regulation.
Last week, Senator Hatch and his colleague Marco Rubio (Florida) introduced a legislation that aims to reduce the Social Security payroll deduction to workers from 6.2 percent to 3.1 percent for two years, to fully extend it to the island as reimbursement of the federal tax credit system for dependent children and facilitate access to loans for small entrepreneurs.
Maldonado said that, even if the legislation has a strong content aimed at encouraging consumption, "everything helps." "We are looking for job creation and capital investment," he said, but said that "I have an island in crisis, and I will accept all the help that may come."
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