Proposal would provide some compensation for local bondholders’ losses
Rep. Ángel Morey Noble
By THE STAR STAFF
Some 60,000 local bondholders who lost money in Puerto Rico bonds and closed-end funds could get some relief if legislation to that effect becomes law.
New Progressive Party Rep. Ángel Morey Noble introduced House Bill 1582 this week, creating a tax credit that would allow local bondholders to recover some of the money they lost after investing in Puerto Rico’s bonds. Before Puerto Rico declared bankruptcy in 2017, credit rating agencies had lowered Puerto Rico bonds to junk status in 2014.
“We have introduced this measure to provide economic relief to nearly 60,000 Puerto Ricans who entrusted their savings and possibly their retirement money in Puerto Rico’s general obligation bonds, betting on the security of these investments,” Morey Noble said.
Although the legislation would not return all the money to Puerto Rican investors, it would partially remedy the damage caused to them.
“We believe we must provide relief to the pockets of all citizens who, in good faith, thought they were making a safe investment and who today are uncertain of what will happen and how they will pay their future expenses,” the lawmaker said.
The tax credit will be assigned considering the total net loss as follows: for $50,000 or less, 100% of the total net loss;
$50,001 to $100,000, 90% of total net loss; $100,001 to $200,000, 80% of total net loss; $200,001 to $300,000, 60% of total net loss; $300,001 to $400,000, 50% of total net loss; $400,001 to $500,000, 40% of total net loss; and $500,001 to $1 million, 20% of total net loss.
After the tax credit is determined, up to a maximum of 20% per year of the total credit may be claimed for five years starting on the credit’s determination date.
The legislator said “the credit will be claimed for losses registered for taxable years beginning after July 1, 2013, but before January 1, 2017.” The credit will be computed using the total net loss of the local taxpayer on their investment regardless of whether the investments were guaranteed or not by the commonwealth Constitution.
“Meanwhile, the total net loss is defined as all past due net loss that could not be used against gains from other financial instruments during that fiscal year and for the next seven taxable years,” Morey Noble said.
House Speaker Rafael “Tatito” Hernández Montañez and the full New Progressive Party delegation support the bill, which is expected to go to public hearings.