As Legislature votes on relief checks, PDP presents tax proposal

From left, Popular Democratic Party Sens. Ada Álvarez Conde, Luis Javier Hernández Ortiz and Marially González Huertas

By THE STAR STAFF

As the island Legislature was expected to vote on a bill that would give taxpayer tax relief checks, the Popular Democratic Party (PDP) minority delegation in the Senate on Monday unveiled its third tax-reform proposal, calling for a 5% budget cut across most government agencies to deliver what it described as real relief for taxpayers. 

The PDP plan would rely on the fiscal 2025-2026 budget, which totals $13.095 billion -- the largest in Puerto Rico’s history -- and includes a mechanism allowing the Treasury Department to withhold 5% of monthly budget allocations to most government entities during the first three quarters of the fiscal year.

Senate Minority Leader Luis Javier Hernández Ortiz said those withholdings could total roughly $654 million, excluding agencies not subject to the retention, such as those in the judicial branch. He added that the Office of Management and Budget’s (OMB) executive director would bear primary responsibility for the disbursements and the 5% withholding.

The announcement came as lawmakers prepared to advance a separate measure aimed at returning money directly to taxpayers. If developments proceed as legislative leaders have signaled, the joint resolution authorizing rebate checks for individual taxpayers earning up to $150,000 was expected to be sent to La Fortaleza for consideration by Gov. Jenniffer González Colón on Monday.

Senate President Thomas Rivera Schatz said Monday that once the House takes final action, the Senate would approve House Joint Resolution 278. He described the step as necessary to prompt conversations between the executive branch and the Financial Oversight and Management Board on whether the relief payments are fiscally viable.

During the press conference announcing the PDP’s alternative proposal, Hernández Ortiz and other senators sharply criticized the governor’s tax-reform plan, accusing the administration of misleading the public about its feasibility and about the governor’s interactions with the oversight board.

Hernández Ortiz said the administration identified only $193 million in revenue measures to support the governor’s plan, leaving a $370 million gap. He pointed out that the oversight board has pegged the total fiscal impact at $563 million.

“The governor lied when she presented this so‑called tax reform,” he said.

Sen. Josian Santiago Rivera noted that on Jan. 15 the PDP delegation asked the board to disclose documents, notes and analyses related to the administration’s proposal, including the controversial 11.5% tax on solar equipment -- dubbed the “sun tax.” Santiago argued that the governor’s bill did not eliminate any taxes and instead created new ones.

On Jan. 20, the PDP delegation also requested related documents from La Fortaleza and the OMB, reminding officials that the administration had previously promised to provide the information.

Sen. Marially González Huertas said the delegation met Jan. 22 with oversight board executive director Robert Mujica, who confirmed that the “sun tax” was not requested by the board but originated with the González Colón administration. She said the PDP supports a “proper” tax reform that reduces the burden on working families but avoids new taxes.

While in Madrid for a tourism industry fair, the governor questioned with whom the PDP senators had met at the board and maintained that her tax reform would become a reality. The PDP lawmakers responded that the administration continued promoting the proposal despite knowing it lacked the board’s support.

PDP Sen. Ada Álvarez Conde said the oversight board’s Jan. 30 letter “put an end to the governor’s false promises,” noting that the board found the proposal violated the Puerto Rico Oversight, Management and Economic Stability Act, commonly known as PROMESA, impacted the certified budget and lacked identified funding sources. She emphasized that the PDP had been the first to formally request information about the reform, beginning Jan. 15.

Regarding the administration’s proposed relief checks, Hernández Ortiz said the public should not be misled into thinking they represent a new benefit, noting similar programs have been implemented before.

“This isn’t a gift from the González administration -- it’s money that comes from taxpayers themselves,” he said. “While Jenniffer González and this administration sell false promises they know they cannot fulfill, our delegation presents concrete solutions for a real tax reform.”

He also urged the governor to return funds spent on advertising the proposal, saying officials “knew in advance” that the oversight board would reject it.