A Puerto Rico lawmaker is proposing widening the application of the commonwealth’s sales tax.
Senator José Nadal Power is proposing that the sales and use tax be extended to cover a range of professional services, school supplies, and funeral services not currently covered. The 7% tax would also be extended to cover the purchase of solar power equipment. Colleges currently exempt from paying the sales tax would have to pay it.
Among the services that would be covered include the services of lawyers, engineers, architects, accountants, agronomists, brokers, agronomists and others.
Nadal Power, like Gov. Alejandro García Padilla, is a member of the Popular Democratic Party, which controls both houses of the commonwealth’s legislature.
In mid-March Deputy Finance Minister Pedro Cintron told a legislative Finance Committee that García Padilla was planning to include new taxes in the fiscal 2013-2014 budget.
In mid-March Secretary of the Treasury Melba Acosta Febo told The Bond Buyer that the tax increases would mainly close gaps in corporate income taxes. However, Acosta Febo also said that the administration was planning to expand the amount of sales and use tax revenue received. This would be done by eliminating several exemptions and closing sales tax loopholes, she said.
“Income measures are part of the budget analysis and are being studied comprehensively by our economic team,” García Padilla told The Bond Buyer. “At this point, Senator Nadal Power’s proposal has not been brought to my attention.”
García Padilla is expected to propose a fiscal 2014 budget by June. The island’s fiscal year starts on July 1.
The Popular Democratic Party holds 18 out of 27 seats in the commonwealth’s Senate and 28 out of 51 seats in its House of Representatives.
Revenues from the commonwealth’s sales and use tax are split between municipalities, the territory’s government, and COFINA, which pays off bonds financed with the sales tax. The municipalities get 1.5% of sales revenue and the other two bodies each get 2.75% of sales revenue.