Puerto Rico Gov. Luis Fortuño last week in his state of the commonwealth address pledged to lower taxes for all Puerto Ricans as a newly created tax reform committee will work on revamping the island’s tax system.
With a smaller, more efficient government the governor believes Puerto Rico’s operating budget can absorb the potential tax cuts. He did not offer specific tax reductions.
“This reform will be based on three basic principles: first, lower everybody’s tax burden, but especially the middle class; second, reward work and success; and third, promote our economic development, stimulating saving and investment,” Fortuño said in the speech.
The governor anticipates filing tax reform legislation later this year.
Puerto Rico’s Supreme Court last week ruled in favor of Law 7, Fortuño’s fiscal emergency law, which the legislature passed last year. Upholding Law 7 allows the government to lay off certain employees to reduce the government’s payroll.
Ultimately, it is seeking to slash its workforce by more than 24,000 positions, although 13,774 workers will move into other government posts. Many of those reassignments involve boosting Treasury Department collection efforts to help bring in more tax receipts.
The governor said he would create jobs by increasing housing construction with $350 million of Housing Finance Authority loans. Another $190 million from the local stimulus package — which is funded with sales tax bonds — will help finance public transit, highway improvements, and San Juan’s Golden Triangle, a mixed-use urban redevelopment plan.
The administration seeks to lower the island’s dependence on oil and promote more clean and renewable energy.
“We will also submit a bill to create a Green Energy Fund that will serve to promote the development of renewable energy projects,” Fortuño said. “This fund will complement federal incentives to effectively develop Puerto Rico’s renewable energy industry.”