For years it has been a customary practice to provide incentives to large foreign companies and chain stores that decide to land in Puerto Rico, from the very moment they plan to settle here.
However, the reality, as we see more clearly every day, is that these incentives are not key to their expansion plans in Puerto Rico. These organizations are well aware of the potential sales that they can pocket per square foot on our island.
For example, studies have shown that sales per square-foot in the big malls in the metropolitan area are up to 35 percent higher when compared with those on the United States mainland.
Through alliances with the state government and municipalities, these large companies manage to get salary incentives and municipal tax exemptions, justifying them with the argument of “the impact of job creation in the municipalities where they operate.”
However, studies show that far from creating new jobs, what really happens is a displacement of these, and in turn, the jobs created by small and medium enterprises (known as PyMES in Spanish,) disappear as they are forced to close or reduce their operations as a result of unfair competition by these organizations.
This is even more alarming when we talk about companies that are among the largest in the world, with global presence, and whose sales are larger than the gross domestic product of many countries, including our island, of course.
The reality is that the development and expansion of PyMEs in Puerto Rico presents a clear contrast in opportunities of exemptions and incentives. Although recent legislation such as Laws 62, 120 and 135 have taken a step forward in supporting the Puerto Rican PyMEs, these initiatives fall very short when compared to the benefits granted to large foreign enterprises.
Despite these large differences in support for them vs. locals, in 2015 the PyMEs registered a growth of 4 percent compared to the previous year and generated 43 percent in private, non-government employment.
Given this illogical situation, I urge all relevant authorities, elected politicians, and those in the race for positions in the next elections, to reevaluate the process of granting exemptions, and municipal and wage incentives, and face the economic effects these disparity have reported and that gravely affects our economy.
The PyMEs sector should be supported, encouraged and promoted by public policy actions and have the same advantages they grant big business. It is time to allow us to compete on equal terms. We are all committed to support local businesses and what they represent and achieved in times of crisis for Puerto Rico, but we must put words into action. Hollow discourses are not the answer.
It’s time to present alternatives to the code of exemptions and incentives that can help retain and expand our PyMEs, and compete on equal terms. We need, for example, a minimum of 75 percent exemption in municipal patents and 100 percent tax exemption for movable and unmovable property, for a minimum period of seven years. We need to make sure that every Puerto Rican PyMEs created or looking to expand can really compete and receive the same benefits as the foreign enterprises.
Let us not lose perspective that to strengthen our economy we need to encourage the local entrepreneur, whose income, expenses, profits and investment go straight to our economy and do not leave the island like a thief in the night. We are not asking for anything unreasonable, we just want equality and an even playing field.