Private sector execs meet with House Finance Committee chair on inventory tax elimination
Leaders of several private-sector associations expressed optimism about the possible alternatives the House of Representatives is shuffling to eliminate the inventory tax, on or before the end of this legislative session.
During a meeting Monday between retailers and merchants and Rep. Antonio Soto, chairman of the House Finance Committee, it was agreed that the tax has to be voided.
“Our commitment, as well as that of House Speaker Carlos ‘Johnny’ Méndez, is to achieve the elimination of the inventory tax,” Soto said.
“In recent months, we have been dealing with several tax-related issues in Puerto Rico. Having completed the evaluation of the new tax model, we’re now focused on the tax on inventories,” he said.
“We’ve already identified a source that replaces more than 52 percent of that income and we are waiting for information we have requested from the Treasury Department to complete the analysis of the formula that will replace the remaining 48 percent,” the lawmaker said, without disclosing specifics.
Figures validated by the House Finance Committee’s technical team and the Municipal Revenue Collections Center (CRIM, as it is known for its initials in Spanish,) show that$219 million per year must be replaced if the inventory tax is eliminated. The analysis shows that $116 million has already been identified, without the need for new tax burdens, private sector representatives confirmed.
“We’re optimistic with today’s conversations between the private sector and Soto,” said Iván Báez, president of the Retail Trade Association. “We got a commitment from him that the bill will be seen before the end of this session, so that we finally achieve this common goal among retailers, citizens and the Finance Committee.”
“Doing so will promote savings to the consumer, increase in the island’s inventories and that companies that are evaluating investing in the island can go through with their investments,” Báez said.
Soto said the “toxic” tax must be eliminated and the House will be in talks with the mayors to guarantee the replacement of the money that the municipalities currently receive from the inventory tax.
“We call on the Treasury Department to promptly provide the information requested to achieve this,” added Soto.
Kenneth Rivera, president of the Puerto Rico Chamber of Commerce, said it is “very positive” that funds have already been identified to replace a large part of the income from the inventory tax, without representing new tax measures.
“We believe that we are very close to having our claim addressed and we join the Representative’s request to the Treasury Department to collaborate with the information requested, to complete the analysis,” Rivera said.
The elimination of the tax will also represent a relief against the costs of construction materials, which have increased by more than 25 percent after hurricanes Irma and María, said Emilio Colón-Zavala, an engineer in the private sector.
“We support the effort and ask the Executive and the Legislature to work as a team and to approve this measure of social justice and economic development,” he said.