The Secretary of Economic Development and Commerce (DDEC, Spanish acronym), Manuel Laboy, along with members of his team and his counterpart in the Fiscal Agency & Financial Advisory Authority (FAFAA), Omar Marrero, will hold a meeting in the coming days to discuss the Oversight Board's proposals regarding the reorganization of the department, last-minute changes made to the Tax Incentives Code and other legislative measures.
Meanwhile, Laboy indicated that he will continue working on the agency´s implementation plans developed under the Fiscal Plan endorsed by the Board.
"We are executing the fiscal plan. If this bill is signed into law and there is an agreement with the Board, our implementation plan will be adjusted. But now we will continue with the task according to the rule of law that is Act 141 and the fiscal plan," he told El Nuevo Día, referring to the initiative seeking that the Tourism Company remains as a public corporation.
On November 25, Board Executive Director Natalie Jaresko sent a letter to Governor Wanda Vázquez Garced and legislative presidents to question the merits of several bills that would be contrary to the fiscal plan. House bills 2172, 2210, 2286, and Senate bill 1455 are among the measures included in that letter.
"Voting on bills with little debate and no hearings on such important matters is highly irregular and sets a poor precedent," Jaresko said, adding to her list of objections two other joint resolutions that would have reallocated funds from prior fiscal years.
In the case of Bill 2172, which was approved and would be on its way to the governor's office, the measure would amend several laws such as the Internal Revenue Code. The piece proposes exempting businesses from the Sales and Use Tax (SUT) when their revenues do not exceed $300,000 annually and would increase from 5 percent to 8 percent tax reductions for individuals with incomes of up to $150,000. It also sets a 1.5 percent rate on certain contracts granted by the government that exceed $300,000 and would open the door for companies dedicated to green energy to pay a preferential rate of 4 percent.
Meanwhile, Senate Bill 1455 proposes that the Tourism Company continue as a separate public corporation within the DDEC when, as provided in the Fiscal Plan, the Tourism Company is required to be consolidated with the economic promotion agency (DDEC).
Based on Jaresko's letter, the bill that would amend the so-called "tax reform" approved last year seems unrealistic, since the adjustments proposed to pay for these new tax benefits would not be sufficient.
According to Jaresko, “many of the tax credits eliminated by the legislation were already subject to an issuance moratorium, further indicating these tax credits will not provide sufficient offsets to pay for the proposed tax cuts,” and so they would not result in additional savings to the Treasury.
"Other provisions of the legislation are concerning because they erode financial transparency and trust," said Jaresko about a provision of the measure that increases the required minimum revenue threshold for companies to file audited financial statements from $3 million to $10 million.
Currently, the Board and the government are still fighting over Law 29, which exempts municipalities from making contributions to the PayGo pension payment system and the government´s Vital Plan.
Laboy said that although the Legislature consulted them on certain matters, the measures questioned by the Board were developed by the Legislative branch and the Executive knew nothing about them until they were passed. Therefore, it will not be until they meet that they will decide about with the measures in controversy and indicate the Board the steps to be taken.