The Puerto Rico Senate passed a budget Monday addressing revenue needs of the Puerto Rico Highways and Transportation Authority, as well as of the government.
Puerto Rico leaders and analysts have said that the authority needs to add new revenue sources.
The Senate budget would increase the excise tax on oil, with the money going to the authority. Puerto Rico had the lowest oil tax in the nation, said Victor Pizarro, tax advisor to the Senate treasury committee. The new tax will be $9.25 per barrel.
The budget specifies that the oil tax is to rise with inflation, Pizarro said. In addition, there will be a 1.5% increase every four years on top of the inflation adjustment.
Additionally, a greater portion of car registration fees will be allotted to the authority’s debt service fund, Pizarro said.
Together, these initiatives will provide $260 million to the authority for debt service, Pizarro said.
The Senate budget version retains the central taxes for the government budget announced by Treasury Secretary Melba Acosta on June 12. A new tax on business sales volume is projected to bring $522 million. Higher taxes on corporate profits are expected to bring about $270 million. A new business-to-business sales tax in a limited group of industries is expected to yield about $287 million.
The Senate bill has a provision to improve the collection of internet taxes. The bill will require sellers to collect the tax rather than rely on the buyers to volunteer their internet tax purchases, Pizarro said. This should lead to at least an additional $20 million in the first year, Pizarro said.
The government is also raising the tobacco tax and extending it to chewing tobacco. This should collect an additional $67 million, Pizarro said.
Though not in the budget, the Senate is considering reforming the commonwealth’s use tax to increase collections, Pizarro said. The tax affects goods imported to the island intended for use as opposed to sales. For example, a construction company importing steel girders would be required to pay this fee.
In the new approach to this tax, companies would have to pay as soon as they received the goods at ports. The government may adopt this approach by the end of the fiscal year on June 30, yielding an extra $20 million per year, Pizarro said.
The Senate budget is only slightly different from the House of Representatives’ budget, said Rafael Hernández Montañez, chairman of the House of Representative’s Finance Committee. Over the next few days leaders of the two chambers will meet in committee to create a compromise budget.