Governor vetoes inventory tax bill and reintroduces measure

The new version of the bill maintains the original proposal from March, which establishes a five-year freeze on the inventory tax and its eventual replacement with new revenue sources. “And this time, with the support of all 78 municipalities in Puerto Rico, we are confident that this measure will be approved as we are submitting it,” Gov. Jenniffer González Colón said.

By THE STAR STAFF

Gov. Jenniffer González Colón announced Thursday her veto of House Bill (HB) 420, related to the inventory tax, and the filing of a new version of the measure with the unanimous support of all 78 mayors of Puerto Rico.

“There is a concern I have, this governor has to make a decision thinking about the people,” the governor stated during a press conference at La Fortaleza alongside mayors from both of the island’s major political parties. “[...] Removing or approving the measure as it stands means that the government would have to pay $314 million next year to be able to replace [the inventory tax]. For that reason, I will be presenting my veto of House Bill 420 today, which imposes an additional burden on municipalities.”

“This veto will be explained in light of the points that have been discussed here as part of this effort, and I want the mayors themselves to be able to speak about it,” she added.

The new version of the bill maintains the original proposal from March 18, which establishes a five-year freeze on the inventory tax and its eventual replacement with new revenue sources.

“And this time, with the support of all 78 municipalities in Puerto Rico, we are confident that this measure will be approved as we are submitting it,” González Colón said.

HB 420 sought to freeze the inventory tax for three years and establish its elimination by 2028.

The governor emphasized that the consensus among the municipalities is unprecedented.

“I believe it is the first time in 20 or 30 years that we have seen all 78 municipalities agree on a measure that will affect their municipal finances and, at the same time, be willing to approve it,” she stressed.

The governor also announced the creation of a working committee that will collaborate with the Legislature in identifying new revenue sources to replace the tax.

“I want to thank both the Mayors Federation and Mayors Association for their willingness to engage in dialogue, conversation, communication, to seek alternatives, and to be responsible with the use of municipal finances,” González Colón said.

The inventory tax generates between $210 and $230 million annually for municipalities, according to data from the Municipal Revenue Collections Center, or CRIM as it is commonly known by its acronym in Spanish.