Puerto Rico Resident Commissioner in Washington, Pedro Pierluisi, on Thursday praised the Senate Finance Committee’s decision to extend, for 2014 and 2015, a package of expired tax provisions known as “tax extenders.”
“I am pleased that the package includes two provisions I specifically requested that are beneficial to Puerto Rico,” he said.
“The first provision extends the tax deduction under Section 199 of the Internal Revenue Code, which effectively reduces the tax rate for U.S. manufacturing companies doing business on the island from 35 percent to 32 percent,” he said.
“This deduction will save companies with operations in Puerto Rico that are not organized as Controlled Foreign Corporations about $222 million in 2014 and 2015, thereby providing them with the same tax treatment they would receive if they were operating in a U.S. state,” Pierluisi said.
The second provision extends the additional $2.75 per proof gallon that Puerto Rico is eligible to receive under the rum cover over program, thereby increasing the grant from $10.50 to $13.25. This translates into about $200 million in funding to Puerto Rico in 2014 and 2015.
“I note that I strongly support an amendment that Sen. Robert Menéndez, a member of the Finance Committee, has filed to modify the tax extender package. This amendment is modeled on legislation that Sen. Menéndez and I have introduced on multiple occasions in the past, and would impose reasonable limits on the amount of cover-over funds that the governments of Puerto Rico and the U.S. Virgin Islands can use to subsidize the operations of rum companies within their jurisdictions,” he said.
“Given the fiscal crisis that Puerto Rico confronts, the local government should not be giving nearly half of the funds it receives to rum companies. That is bad public policy and it is bad for Puerto Rico,” Pierluisi noted, adding that the legislation voted on Thursday included provisions extend Section 199 and the additional $2.75 grant in cover over funding.