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Open Spaces: Proposed changes to P.R.’s tax incentive code must be transparent

Nonprofit organization Open Spaces, in a public hearing before the Puerto Rico Senate Finance Committee, said the two tax bills under consideration — the Tax Incentive Code (Senate Bill 1013) and the System of Integrated Tax Credits (House Bill 1880) — lack basic elements of transparency, accountability and citizen participation.

In testimony about the measures, Open Spaces put forth four proposals to ensure citizen access to all relevant information regarding these measures, exempting any confidential taxpayer information: 

·      The Tax Incentives Code must publish the Annual Report on the Effectiveness of Incentives and a Budgetary Report on Economic Incentives. Likewise, the System of Integrated Tax Credits must publish an annual public report detailing any sale of tax credits; 

·      Both bills must fully evaluate all existing tax incentive laws in Puerto Rico; 

·      The bills must justify the continued application of tax laws and programs that lead to a negative return on investment for the government; and, 

·      Both bills must divulge the total annual cost of all tax incentives and concessions, which according to data from the Department of Economic Development and Commerce is close to $7.5 billion and constitutes 86% of the Puerto Rico government’s general yearly budget. 

Open Spaces Senior Policy Analist, Daniel Santamaría-Ots, said House Bill 1880’s proposed platform would only track $250 million in yearly expenditures and keep hidden the remaining outlays that make up the Puerto Rico government’s $7.5 billion yearly budget.

Additionally, Santamaría-Ots said the Senate’s proposed Tax Incentive Code would only make public between $450 million and $500 million a year, also failing to address the bulk of the $7.5 billion budget.

In recent testimony at a hearing by the Puerto Rico House Committee on the Treasury, Budget and Supervision, Administration and Economic Stability, Santamaría-Ots said the proposed Tax Incentives Code omits any fiscal analysis of 18 of the 76 laws related to tax expenditures, which constitutes a lack of transparency.  

These omissions keep the costs and benefits of Puerto Rico’s tax incentives invisible to the public, he said. 

Santamaría-Ots said citizen participation is indispensable for the development of any incentives-based law that impacts the Puerto Rico government’s general fund, also noting that the public must be able to access all documents produced by these laws in order to participate in the public debate.

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This story was written by our staff based on a press release.

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