The Puerto Rico House of Representatives passed a 64% increase in the island's sales tax, sending the bill for Gov. Alejandro García Padilla's signature.
The House voted Tuesday to increase the sales tax to 11.5% from 7% and increase a tax collected at ports on imported goods by 75%, to 10.5% from 6. The house had approved those measures last week. Tuesday's vote incorporated a Senate amendment that stripped the tax from processed foods, according to a Senate staff member.
The legislation also includes a new tax on transfer pricing of large chain retail stores.
García Padilla is expected to sign the legislation, which is intended to boost revenue for the coming year. The new measure is expected to bring in additional revenue of $1.15 billion in fiscal year 2016, according to a Puerto Rico Treasury spokeswoman.
The Puerto Rico Senate has started to hold hearings for its fiscal 2016 budget, which starts July 1.
The governor has proposed a $9.8 billion General Fund budget for fiscal year 2016, an increase of $235 million from the current fiscal year. The budget would increase payments for debt service by $400 million and for government retirement systems by $82 million.
To achieve a balanced budget the governor's administration anticipates cutting discretionary spending by $674 million along with introducing the tax increases.
The governor and members of his Popular Democratic Party are working for a balanced budget that would allow the government to sell certain long-term and short-term securities. The securities are needed to prevent it and some public authorities from defaulting and keep the government running through the coming fiscal year.
