Senate leader vows prompt alternative to inventory tax

Senate President Thomas Rivera Schatz

By THE STAR STAFF

After the island Senate approved House Bill 420, which freezes the Inventory Tax, Sen. Thomas Rivera Schatz, the president of the upper chamber, emphasized on Tuesday that the Legislative Assembly will ensure that municipal governments have a solution.

“The Inventory Tax freeze is a commitment the New Progressive Party made in its government platform, and we have now enacted that commitment for five years through the legislation passed in the House and Senate yesterday,” Rivera Schatz said. “The law sets deadlines for presenting alternatives to replace this revenue for municipal governments. We are fulfilling our programmatic pledge while also applying necessary pressure to actively seek a solution before the five-year freeze expires. The Legislative Assembly will not leave municipal governments without a remedy. Our history and record prove this -- we have always supported municipal governments. However, we cannot simply freeze this issue for five years and wait to see what happens afterward. We are taking this matter seriously. Our goal is to establish a schedule for addressing what needs to be done to effectively find a substitute for the Inventory Tax.”

The inventory tax is imposed on businesses based on the value of their inventories, which includes finished goods (ready for sale), partially assembled products (work-in-process), and raw materials. The tax serves as a funding source for financially struggling municipalities, but the business sector is advocating for its elimination.

Bayamón Mayor Ramón Luis Rivera Cruz stated that, for now, municipalities are not facing any immediate issues, as there is a commitment to finding a way to replace the revenue that local councils would lose.

“At this moment, there is no impact on the municipalities because, by freezing the tax, they will continue to receive the same amount as before the freeze. So, there is no problem,” he said. “This is a campaign commitment and a promise to the community that we intend to keep. We hope that the final solution will not negatively affect the municipalities. However, as the Senate president mentioned, we understand that efforts will be made to recover that lost revenue at some point. We have five years to work on this issue, and we must honor our commitments.”