Méndez Núñez files bill to suspend gas tax
By John McPhaul
The leader for the New Progressive Party (NPP) delegation in the House of Representatives, Carlos “Johnny” Méndez Núñez, announced on Wednesday the filing of a measure to suspend taxes on gasoline and diesel oil for four months, during the period from March 1 to June 30.
“With this measure, we immediately do justice to our consumers, creating real and visible savings,” Méndez Núñez in a written statement. “We believe that this measure is necessary to provide relief to consumers who have been burdened by fuel price increases. This reduction must be a priority before any allocation for the distribution of funds by the Legislative Assembly.”
The bill, which was to be filed Wednesday, amends Section 3020.06 of Law 1-2011, as amended, better known as The Internal Revenue Code for a New Puerto Rico, to enable the temporary suspension of the aforementioned tax.
Meanwhile, House Speaker Rafael “Tatito” Hernández Montañez recommended on Wednesday to those who seek to eliminate the tax on petroleum derivatives (known as the “crudita”) so that the price of gasoline falls, to ask teachers whose retirement and salary are based on the tax if they agree with such a move.
“I want us to look at that and ask the teachers, who have been very active these days, the correctional officers and all these officials, that now that the debt is going to be paid and it is going to go down from $2.7 billion, if they are willing to eliminate the ‘crudita’ and not give me the increase [which would pay for public employees’ salary increases],” the House speaker said in a radio interview.
“In last year’s bill where the debt was restructured, all those resources went from the Highway Authority to the General Fund,” he added. “With that, the increases will be paid for. That is how the Retirement plan is being paid for.”
In January 2015, then-Gov. Alejandro García Padilla signed into law House Bill 2212, which increased the tax on a barrel of oil and its derivatives. Hernández Montañez was at that time the chairman of the House Finance Committee and worked on the measure.
The bill increased the tax, which was already paid by oil and its derivatives, from $9.25 to $15.50. Among other things, the increase in the tax is reflected in four cents to the price per liter of gasoline.
Originally, the measure was for the Highway Authority to pay a debt of $2.2 billion to the Government Development Bank (GDB). However, when the GDB was dissolved and bankruptcy was declared in Puerto Rico, the funds collected with the tax went to the General Fund.
However Méndez Núñez said the money to pay for his proposed “immediate” reduction, estimated at $44.8 million, would come from excess collections for the current fiscal year -- over $230 million -- using the $50 million that the majority Popular Democratic Party legislative delegation wants to distribute through a “pork barrel” of discretionary spending.
“The bill intends to establish a moratorium on the imposition, collection and payment of the excise tax established in Subsections (1) and (3) of Section 3020.6, which represents an immediate reduction of 16 cents per gallon of gasoline and 4 cents per gallon ‘gas oil’ or ‘diesel oil,’” Méndez Núñez said. “This bill provides instant relief without affecting revenues. We pass these excesses in collections to the people, as it should be.”