Treasury reports 2% YOY revenue collection increase
Puerto Rico Treasury Secretary Juan Zaragoza (Credit: © Mauricio Pascual)
The Puerto Rico Treasury Department collected some $9.1 billion in revenue for the General Fund during Fiscal 2016, exceeding Fiscal 2015 numbers by $214.4 million or 2.4 percent, agency Secretary Juan Zaragoza-Gómez said.
The increase was much greater considering that last year, there were revenues from legislative measures of nearly $468 million that were not recurrent for FY 2015-16, he said. When comparing the revenue registered for the year to the revised total estimate of $9.2 billion, the government achieved a 98.7 percent collections rate. The 1.3 percent difference represented a shortfall of some $117 million, the agency noted.
Tax legislation was a determining factor in the level of revenues collected during Fiscal 2016, he said, naming amendments by Act 72 of May 29, 2015 to the Puerto Rico Internal Revenue Code of 2011 as an example.
The primary change was the increase in the Sales and Use Tax (SUT) rate from 6 percent to 10.5 percent, effective July 1, 2015. Another change was the elimination of SUT exemptions for business-to-business services (B2B) and designated professional services, for which a 4 percent tax rate was established, to enter in effect on Oct. 1, 2015.
SUT total revenues collected in Fiscal 2016 were $2.3 billion, which represented a year-to-year increase of $959.8 million. Of this total, revenues from the collection of the 4 percent tax over business-to-business (B2B) services and designated professional services were $89.4 million.
From the SUT total revenues, $1.5 billion went to the General Fund, or $933.4 million more than last year. Furthermore, SUT revenues represented 17 percent of total General Fund revenues. The rest of the SUT collected were distributed as follows: $696.3 million to the Sales Tax Financing Corp. known as COFINA; $117.7 million, or 0.5 percent, to the Municipal Administration Fund; and $3.2 million to the Film Industry Fund.
Another law that affected collections is Act 159 of Sept. 30, 2015, which amended the provisions of the Revenue Code to limit the powers of the Treasury Secretary to formalize final agreements.
This law put an end to the practice that was used for decades in the Treasury Department, especially during the month of June of each year, of conducting transactions and setting up preferential tax agreements with companies and individuals to collect revenues and balance the budget in lieu of compromising future income.
“For the first time, in June of the fiscal year that just ended, these kinds of agreements were not done,” Zaragoza-Gómez said.
As for revenue distribution for Fiscal 2016, the principal item was individual and corporate income taxes, which totaled $4.5 billion, or 49.2 percent of total revenues. Foreign corporation excise tax revenues were $1.8 billion, for 20.3 percent, and excise taxes associated to consumption expenses amounted $742 million or 8.1 percent.
