CRIM: House bill to phase out inventory tax needs more work

Municipal Revenue Collections Center Executive Director Reinaldo Paniagua Látimer

By The Star Staff

Municipal Revenue Collections Center (CRIM by its Spanish acronym) Executive Director Reinaldo Paniagua Látimer insisted Wednesday that the entity does not agree 100% with the language approved in the Inventory Tax Bill in the island House of Representatives.

At the same time, the official said he is hopeful that before June 30, when the legislative session ends, a fair agreement with all parties involved can be reached without adversely affecting the municipalities.

The business sector says Puerto Rico’s municipal inventory tax puts the island’s businesses at an economic disadvantage and is recommending its elimination. Municipalities, which are already financially ailing, oppose the repeal because it is an important source of revenue.

House Bill 1798, authored by House Speaker Rafael Hernández Montañez, aims to amend the Municipal Property Tax Law of 1991 to establish a temporary methodology for taxing inventory. The bill seeks to establish tax liability for the next six years according to the inventory. After that the inventory tax would be eliminated.

The proposed statute the House passed in November includes a five-year freezing period, different calculations for existing and new businesses, and proposes the creation of a seven-person group to provide recommendations for permanent reform.

“The Senate Treasury Committee has the bill approved by the House of Representatives at the end of the last session. [The Senate panel] has asked us for our comments. We have sent them to you,” Paniagua Látimer said. “Everyone is clear about the position of the CRIM administration and the CRIM governing board on this issue. We have been in conversations with Senator Juan Zaragoza and with the Federation and Association of Mayors on the bill that was approved in the House.”

The CRIM has suggested a series of amendments to what was approved in the House to put the municipalities in a position to agree with and endorse it.

“We, in many instances, stated that we agreed with the language, but not 100%, of the bill that was approved in the House and we are looking to see if we can find a meeting point between the commercial sector and the municipal governments,” the head of CRIM said. “The governor has been critical and vocal in the sense that he is not going to sign a bill that threatens the fiscal and financial health of the municipalities.”