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  • Writer's pictureThe San Juan Daily Star

Gasoline retailers welcome ‘La Crudita’ fuel tax exemption approved by Legislature

The Gasoline Retailers Association of Puerto Rico says it welcomes House approval of a tax exemption on “raw” gasoline imports for 45 days because any relief to the consumer is good, fair and necessary.

By John McPhaul

The Gasoline Retailers Association of Puerto Rico, through its president Esdras Vélez, said Wednesday that it welcomed the approval in the island House of Representatives of Senate Resolution 240, which proposes a tax exemption on “raw” gasoline imports for 45 days, because the retailers believe that any relief to the consumer is good, fair and necessary.

“We welcome any relief that benefits the consumer,” Vélez said in a written statement. “In our case, we also benefit from having to invest less when paying for each tank, which gives us more liquidity to manage our businesses at a time when inflation, increases in the minimum wage and electricity have us strangled.”

The Association, which represents the owners of around 500 gas stations, said it trusts that the Gov. Pedro Pierluisi Urrutia will sign the measure and awaits the details of the implementation to ensure that retailers are given fair treatment with respect to importers. The retail sector could also have purchased inventory on which taxes have already been paid, which would represent an additional loss at the time the exemption takes effect.

“The DACO [Department of Consumer Affairs] secretary made statements yesterday [Tuesday] that must be taken into consideration that some importers have already paid the taxes corresponding to their entire inventory,” Vélez added. “Coincidentally, the same applies to the retailer who could have stocked inventory that paid taxes and whose loss could not be recovered.”

However, he believes that this situation can be easily resolved by granting a credit, similar to the way it is done with the payment of the sales and use tax, which is also paid in advance, at the time of sale until the “old” inventory is exhausted. Vélez said he identifies with the other concerns or warnings of the DACO regarding details in the language that could affect the implementation of the measure so that it fulfills its mission.

“That has likewise been our approach before the secretary of the DACO regarding the language of the order to freeze the profit margin in force since February 24, where it imposes a fixed margin instead of the margin that the retailer had at the time of freezing, as had been the case in the past,” Vélez said. “Also remember that this sector has been with frozen margins since the beginning of the pandemic, 24 months ago. We feel like we have a fist in our face. … Who survives like that? Why be selective only with the gasoline retail sector?”

Vélez added that he also believes the proposed temporary relief at the investment level allows them to be ready, through greater economic liquidity, to acquire the necessary merchandise and products for the hurricane season, which begins June 1.

“The hurricane season is approaching and we do not want the lack of liquidity due to such austere profit margins to force us to limit access to fuel for customers,” he said. “Trusting, furthermore, that the pattern of blackouts does not continue because it may be that the demand ends up being greater than the supply and the product is scarce due to lack of cash so that the retailer can buy it, as we saw recently.”

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