The Puerto Rico Senate on Thursday overrode the governor to put an end to the roll out of a value added tax and an associated increase in business-to-business consumption taxes to 11.5% from 4%.
The administration of Gov. Alejandro García Padilla had been considering replacing the island's sales and use tax with a value added tax since at least December 2014. The legislature has gone back and forth on the topic.
Puerto Rico introduced a business-to-business 4% tax on Oct. 1, 2015. In the winter of 2015-2016 and the spring of 2016 sentiment of the legislature swung against an increase of this tax to 11.5%. The governor earlier this month vetoed the bill to stop the increase.
Twenty of the 27 members of the Puerto Rico Senate voted to override, meeting the two-thirds threshold to reverse the governor's veto. On Monday 45 out of 51 members of the Puerto Rico House of Representatives had voted to override.
The governor denounced the override, saying the representatives and senators were putting their political interests over the welfare of the people.
While the current consumer tax system has some elements like a value added tax, the stopping of the increase of the business-to-business tax (which would have brought it to the level of the consumer tax), ends the full roll-out of a VAT tax.
