Governor: Fiscal board will change thinking on ‘revenue neutral’ spending

By THE STAR STAFF

Gov. Pedro Pierluisi Urrutia anticipated on Monday that the vision of the Financial Oversight and Management Board on the issue of tax benefits versus income will change soon.

So far, the oversight board has required that the government, in order to put into effect any benefit to taxpayers, must identify the fiscal means of recovering the cost. The government has had to pass a tax or generate savings in the budget. This is known in the accounting world as “revenue neutral.”

“All the conversations I’ve had with the [oversight] board, there’s been receptivity from the board. The only crucible the board is currently looking at is that it doesn’t affect the government’s ability to balance its budgets going forward,” the governor said at a press conference. “I admit that in the past we had in the tax plan the language of ‘revenue neutral;’ that is, that no tax measure impacted collections. That is, if you reduced a tax on the one hand, you had to increase something on another. That was the board’s inflexible rule in the past.”

“I have already said that this is in the process of being changed,” Pierluisi said. “Right now, we are working with the board so that in mid-March, a Fiscal Plan for Puerto Rico is certified and we anticipate that this area [of the neutral collection] will be one of the areas of change.”

The governor said his proposal for tax changes is one of the changes that the oversight board will make in the Fiscal Plan, by eliminating the “revenue neutral” requirement.