During his second State of the Commonwealth address since taking office, Puerto Rico Gov. Ricardo announced a new tax model to phase out the Business to Business (B2B) and plans to cut the Sales and Use Tax on processed foods from 11.5 percent to 7 percent.
Furthermore, he said the government will give a credit to incentivize labor and will gradually reduce tax rates for individuals and corporations. Also he said a workforce reform will call for removing “obstacles to the creation of businesses and incentives for the working class through the Earned Income Tax Credit.”
In doing so, he said the island would be more competitive place and on par with and other jurisdictions in the United States.
During his speech, he announced salary increases of $1,500 a year for police officers and teachers.
He also confirmed the presentation to the Legislative Assembly of the bill that will define the transformation of the island’s electric power system.
“Today, I filed with the legislative bodies the bill that defines the procedures for this transformation, with the privatization and concession components defined. This process will be done in a transparent manner, with a model that has paid off; namely, the Public-Private Partnerships Act,” the governor said.
The law will authorize the allocation of resources from transactions to capitalize the retirement systems of the Puerto Rico Electric Power Authority (PREPA) employees, which are unfunded. The goal is to stabilize the price of energy at 20 cents per kilowatt-hour and have a more reliable, efficient, and environmentally friendly system, he said, adding no PREPA employees will be laid off in the process.
Instead, employees will get to choose to either migrate to the private company that will invest in PREPA or remain as a government worker under the Single Employer Act with their current benefits and salary.
The governor also announced plans to lower taxes and continue the government reorganization to reduce the number of agencies from 118 to 35. He projected savings will reach some $620 million annually through Fiscal Year 2023.