Gov’t, fiscal board said looking at tax reduction options
By The Star Staff
The island government and the Financial Oversight and Management Board are discussing a possible reduction in the sales and use tax (IVU by its Spanish acronym) or other tax rates, Treasury Secretary Francisco Parés Alicea said Wednesday.
Speaking in a radio interview, the Treasury chief said the current IVU rate is the highest in the U.S. for the government and the private sector. The discussion is being held in an executive branch tax reform committee.
“There is a committee,” Parés Alicea said. “We have proposed certain reductions. I think the main impediment is that the board requires the measure to [conform to] income neutrality.”
Nonetheless, the oversight board has not been able to make accurate income projections, complicating the probability of a drop in tax rates.
Parés Alicea said multiple factors are improving the outlook for tax collections, including increased labor participation and citizen cooperation in complying with their fiscal duties.
“I believe that the conversations are already taking place with the board, where there is a greater collaboration or more questions from the board, about our opinion in the process of projecting income,” he said. “[…] My hope is that these meetings are not simply for integrating ourselves into the process and that we end up doing exactly what was done in the past, but that more accurate projections are made.”
Although there was no clear indication about the status of the conversations, Parés Alicea said he hopes the proposed cut can be implemented as soon as possible.
A few months ago, Heidie Calero, an economist, suggested that an IVU cut could be appropriate at this time because of an increase in tax collections.
The General Fund reached $1.8 billion in September and October, exceeding estimates by about $197 million.