The Puerto Rico Treasury Department reported Thursday preliminary revenue for July 2014, the first month of the current fiscal year, reached $624 million, up $129 million, or 26 percent, from the total on record for the same month last year.
The current figure also surpassed July 2014 estimates by $37 million, Treasury Secretary Melba Acosta-Febo said.
“Preliminary revenue for July 2014 is a good sign for the beginning of fiscal year 2015. Since January 2013, we have been on a steady path toward recovery and fiscal accountability,” she said. “This month’s results strengthen the foundation for Puerto Rico’s future economic growth.”
Higher collections were driven mainly by a $148 million increase in the foreign corporation excise tax, known as Act 154. This increase is due in large part to an increase in the tax rate to 4 percent from 2.75 percent in July 2013, which was the last month that the tax rate was 2.75 percent (purchases made under Act 154 are reported the following month).
Another driver was corporate income tax revenue of $99 million, up $16 million, or 19 percent, compared to July 2013. This increase was driven by payments of gross receipt taxes, payments by Corporations that had filed for an extension, and payments of estimate taxes.
With respect to Sales and Use Tax (SUT) collections, Acosta-Febo said the approval of Act 18 of 2014 strengthened the Puerto Rico Sales and Use Tax Financing Corporation’s (known as COFINA) financial capacity by restructuring the SUT so that the state tax rate is 6 percent and the municipal tax rate is 1 percent.
In addition, to protect the financial stability of the municipalities, this law established a special fund known as Municipal Administration Fund, through which the municipalities will continue receiving the economic benefits of the revenues attributable to the 0.5 percent.
“July SUT revenues at the 6 percent rate reached $113.7 million, all of which was deposited in COFINA for debt service. For the purposes of comparing July 2014 and July 2013 SUT collections, the SUT figure at 6 percent would be equivalent to $104.2 million at the 5.5 percent rate,” she said.
“When July 2013 revenues are adjusted by the amnesty’s non-recurring amount, which was $12.8 million, the comparable amount totals $98.7 million ($111.5 million – $12.8 million). Accordingly, SUT revenues increased by $5.6 million, or 5.7 percent,” Acosta-Febo said.
Excise taxes for motor vehicles, alcoholic beverages, and cigarettes declined on a year-over-year basis. There was also a reduction in the excise tax on offshore shipments of rum.
“This reduction is due to a decline in the reimbursement per gallon of rum to $10.50 in July 2014 compared to $13.25 in July 2013. It is expected that during this fiscal year, as in previous years, a tax extender will be approved retroactively and this excise tax will again be $13.25 per gallon,” Acosta-Febo said.