CRIM chief: No inventory tax possible until plan to replace funds is available

By The Star Staff

Municipal Revenue Collections Center (CRIM by its Spanish acronym) Executive Director Reinaldo Paniagua insisted Tuesday that no changes to the inventory tax are possible until the island Legislature can provide concrete and viable alternatives for replacing the funds that municipalities will be losing if the tax is repealed.

Likewise, Paniagua said the inventory tax provides about $250 million for the municipalities and comes mostly from large businesses established in Puerto Rico and not from the small and medium-sized merchants as opponents of the tax have claimed. The inventory tax is also used to pay bond issues incurred by municipalities.

“The false idea has been created that the health and permanence of small businesses is directly affected by this tax, when the data shows that this is not correct,” he said in an interview with Foro Noticioso.

The collections resulting from personal property taxes amounted to $430 million in 2019, of which $354 million came from 789 businesses of the 85,570 that constitute that tax base.

“When we look at the inventory tax we see that $257 million was collected, of which $207 million, or 80%, was paid by those 789 taxpayers,” Paniagua said. “Furthermore, official numbers reveal that of those 789 taxpayers who paid the tax, the largest weight ($123 million), fell on only 82 large businesses that already enjoy exemptions, decrees and tax relief from the government, which when added together are greater than this tax represents.”

The official added that it is important for the CRIM to clearly define who really pays this tax, “since the data has been misrepresented for years.”

He said the CRIM and the municipalities understand the concern of the business sector that pays the inventory tax and from the first day they have presented proposals to address the greater concern of the commercial sector that was based on the recurrence of the tax.

“The mayors, through the CRIM, have presented alternatives to address this issue, which have been constantly rejected, particularly by the representatives of the so-called ‘mega stores,’ which are the ones that actually contribute the greatest proportion to the municipalities with this contribution,” Paniagua said.

He advocated that the alternatives being evaluated include accurate proposals to obtain the $250 million that the municipalities would stop receiving on a recurring basis, as in many cases they will determine the permanence of the municipalities.

“The reality is that until now no one has been able to say where those $250 million will come from, on a recurring basis so that the municipalities can continue to serve the people or how the bond issues that are guaranteed with this tax will be paid,” the CRIM executive director said.

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