Less than a month before the start of this year’s hurricane season, the Retail Sales Association once again urged the government to eliminate the tax on inventories as part of the Tax Reform being crafted for Puerto Rico.
The trade group claims that the tax penalizes economic activity on the island, limits the availability of items in stores and weakens Puerto Rico’s ability to face any crisis due to a lack of supplies, which represents a “national security risk of great proportions.”
This imposition was one of the causes for the levels of supplies on the island were insufficient during and after Hurricanes Irma and María, the group known as ACDET for its initials in Spanish claimed.
“We can’ot allow this imposition to again affect citizens who were deprived of access to basic items after the passage of the hurricanes. It is imperative that it be eliminated as soon as possible,” said ACDET Executive Director Lymaris Otero.
It is estimated that Puerto Rico stores currently only have inventory for less than 21 days, which places the island in a vulnerable position to face any crisis or natural disaster.
“The passage of hurricanes Irma and María highlighted Puerto Rico’s delicate condition after the depletion of essential products, which due to our geographic location could not be replaced expeditiously,” she said.
“It seems inconceivable to us, that less than a month until the next hurricane season, no definitive action has been taken on this tax,” Otero said.
“This last emergency should serve as a testimony that the tax on inventories is against the people and it should be included in the Tax Reform discussion,” she added.
In general terms, the ACDET stated the government’s proposed Tax Reform is beneficial and seeks tax relief that promotes doing business in Puerto Rico more competitive and less expensive.
“We urge for the elimination of the inventory tax as part of the Tax Reform, as we believed this concern would be addressed in the bill that is being discussed by the Legislative Assembly,” Otero said.
ACDET is an organization that represents the major store chains doing business in Puerto Rico, both local and national.
“This tax on inventories is undoubtedly one of the most damaging for companies doing business in Puerto Rico and for consumers in general,” Otero said.
“And retailers have been very emphatic, for years, on the importance of eliminating this tax and have expressed confidence that this administration will finally address that claim,” she said.
The ACDET noted that one of the greatest advantages of eliminating the inventory tax is a projected increase in investments in assets, including inventories — which could potentially increase by 25 percent to 40 percent — expansions and new jobs.
Citing economists and certified public accountants, the trade group noted that the $170 million— according to the Municipal Revenue Collections Center — that municipalities currently collect annually can be replaced with the sum of the automatic spike in income taxes projected as a result of an increase in inventory and sales.