Preliminary net revenues to the General Fund for the recently ended FY2019 totaled $11.3 billion, Puerto Rico Treasury Secretary Francisco Parés-Alicea announced, adding the figure is a “new record number for revenue collections.”
On a year-over-year comparison, revenues were up by $2.06 billion, or 22%.
In addition, revenues exceeded three projections prepared by the Financial Oversight and Management Board for Puerto Rico, the Treasury official said.
“The Board projected revenues in the amount of $8.4 billion at the beginning of the fiscal year, then revised the amount to $10.2 billion on Oct. 23, 2018, and to $10.7 billion in the last fiscal plan dated May 9, 2019,” he said.
Parés also noted the fact that for the third consecutive fiscal year, the administration exceeded revenue projections.
FY2019 revenues are explained by a combination of several factors, mainly: the economic activity associated to recovery and reconstruction efforts after the passage of Hurricanes Irma and María; the New Tax Model that became effective in January 2019; the successful implementation since last December of the second phase of the Internal Revenue Unified System (SURI, by its Spanish acronym), and the Taxpayer Rehabilitation Program,” he said.
The corporate income tax category was the main driver with total revenues in the amount of $2.4 billion, a year-over-year increase of $716 million, or 40%.
Sales and Use Tax (SUT) collections totaled $2.8 billion in FY2019, a year-over-year increase of $283 million, or 11%. The General Fund received $2.2 billion of SUT revenues; that is $653 million more than the previous year, with $412 million related to the Sales Tax Financing Corp. Adjustment Plan that was approved in February 2019, he said.
Another category that performed well in FY2019 was the motor vehicle excise tax category. Revenues in this category totaled $519 million, the highest revenue level in 13 years, since FY2006, he said.
The total revenue projection for the recently started FY2020 is $10.4 billion.
“The behavior of revenues in July, the first month of the fiscal year, was positive with respect to projections. The third phase of the SURI system, which includes the individual and corporate income taxes, will be completed by December 2019,” he said.
The New Tax Model benefits will kick off during this year, including the SUT reduction to 7.0%, from 11.5%, for prepared foods, which will enter into effect Oct. 1, 2019, the income tax reduction, and the earned income credit.
Parés predicted that as a result of the measures and the implementation of better tax administration practices to increase tax compliance, the Treasury Department will once again meet revenue goals in FY2020.