PIP senator flags tax change as minor revenue source for tax reform

Puerto Rican Independence Party Sen. María de Lourdes Santiago Negrón

By THE STAR STAFF

The Puerto Rico government’s plan to eliminate the sales and use tax (IVU by its acronym in Spanish) exemption for solar energy generation and storage equipment would generate only $18 million in new revenue -- about 3.36% of the total cost of the proposed tax reform -- a negligible amount that does not justify the measure, Puerto Rican Independence Party (PIP) Sen. María de Lourdes Santiago Negrón has argued.

The proposed repeal of the tax exemption has been criticized by solar energy groups that argued it will make it more difficult for Puerto Rico to achieve the goal of drawing all of its energy from renewable energy sources.

Santiago noted at a hearing Tuesday that the governing administration has insisted the IVU expansion is necessary to safeguard the broader tax rate reductions included in the reform. But with the full package estimated to cost between $535 million and $550 million, she said the solar equipment tax contributes only a small fraction of the needed funding.

The senator questioned the administration’s economic advisers on whether they had evaluated alternative revenue sources over the past year of developing the reform plan.

“The only thing they managed to say was ‘canned foods,’” Santiago recounted, expressing disbelief at the lack of additional analysis.

Santiago suggested the push to impose the IVU on solar systems reflects ideological resistance to renewable energy rather than fiscal necessity. She pointed to language in a recent executive order that describes clean energy technologies as being “controlled by foreign adversaries,” calling it reminiscent of Trump‑era rhetoric hostile to renewable energy policies.

“It’s difficult to believe this stems from an honest fiscal exercise,” Santiago said.

The tax reform package continues to undergo legislative scrutiny.