Puerto Rico Gov. Alejandro García-Padilla signed Thursday the law that approves a 68 percent increase in the excise tax over crude oil and its derivatives to $15.50 from $9.25 per barrel, expected to take effect immediately.
“I appreciate the efforts of all the legislators who worked hard on this bill, especially because I recognize that this was not a decision made lightly,” García-Padilla said. “Precisely, the firmness and morality in this matter is one more example that we don’t have legislative bodies that operate as rubber stamps, but only give way to laws that will benefit the [island].”
Upon signing, the executive branch submitted a new bill to the Legislature, seeking amendments, including the elimination of a clause stating the increase would be subject to inflation.
The proceeds from the increased tax will be used to back a bond emission, which may not exceed $2 billion at an 8.5 percent interest rate, according to a second amendment introduced an approved by both House and Senate Thursday.
The bonds will be sold through the Infrastructure Financing Authority and are expected to pump much-needed cash into the Government Development Bank, which on Thursday stated it’s total net liquidity as of Dec. 31 was at a little more than $1 billion.
“My administration is interested in achieving the best transaction that allows us to continue on the path of fiscal responsibility and economic recovery. We’ll continue to work together to find the best solution to the challenges we face,” García-Padilla said.
The increased tax is expected to cost Puerto Rico consumers about .08 cents at the pump, representing a setback at a time when gas prices have reached record lows, critics of the measure have said.