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The following article was published after Gov. Fortuno’s State of the Commonwealth address on Tuesday night. His address highlights many areas in which the current administration has taken drastic measures including: Energy through a new natural gas pipeline, restored and retained credit rating to the island, huge budget cuts reducing the deficit, and a measurable reform to the tax system. But have the changes been felt by the island’s people?
By : JOHN MARINO, Caribbean Business
Gov. Luis Fortuño used his State of the Commonwealth address Tuesday night to highlight his administration’s achievements, telling Puerto Ricans that “in only two years, we have completed our pledge of bringing you a true change of good government.”
The governor said that his administration inherited a government on the verge of insolvency and in two years managed to:
— Stabilize government finances
— Pay off more than $1.5 billion in past bills
— Reduce the $3.3 billion budget deficit by 75%
— Save Puerto Rico’s credit rating and with it thousands of jobs, and the values of homes and individual retirement accounts
— Get positive ratings from credit rating agencies
The governor also discussed several of the reforms his administration instituted over the past two years, including creating a new permit system that makes it easier for everyone, but especially small and midsized businesses, to expand, grow and create jobs, and instituting an energy reform that will reduce Puerto Rico’s excessive dependence on foreign oil in favor of cleaner and safer sources such as natural gas, solar and wind. Read the rest of this entry »
Legislators across the country now have their eyes on a little-known experiment on the island of Puerto Rico this week. At the beginning of the previous week, two major events occurred which could have national implications, and will, one way or another, prove to be an example to the rest of the country.
First, in a quick strike over the slow news cycle weekend, the legislature and the governor passed a law increasing taxes on 40-50 of the top manufacturing companies on the island. The expected return is now suggested to be $5.8 billion over the next 6 years. However, the concern becomes whether the negative effects of these tax increases will outweigh the positive return. History has proven that organizations will make adjustments based on tax policy: sometimes companies reduce their payroll, sometimes they reduce their operations or overhead, and sometimes they move their operations elsewhere to take advantage of more favorable tax environments. The question is not whether they will react, but how they will react.
On the following Monday, strategically timed to counteract the negative repercussions of the tax increase, a law was passed having the exact opposite effect for most of the rest of the island. As the Puerto Rican Federal Affairs Administration states on their website: Read the rest of this entry »
The SBA’s yearly Global Entrepreneurship and Development Index was released this month and had some surprising results for both the U.S. and Puerto Rico.
The index, according to the executive summary released with the report:
. . . builds on and improves earlier measures by capturing quantitative and qualitative aspects of entrepreneurship. It measures entrepreneurial performance in 71 countries over three sub-indexes, 14 pillars, and 31 individual and institutional variables. The United States appears among the top entrepreneurial economies and ranks third on the GEDI.
It has long been held that the U.S. is the land of opportunity, especially for budding businesspeople, so this new finding brings a shocker to our country.
But perhaps, just as shocking is Puerto Rico’s rise to number #17. Read the rest of this entry »
On September 16th and 17th, the National Puerto Rican Coalition (no affiliation) sent a letters to the USDOJ and the SEC requesting an investigation into a deal between the foreign-owned Diageo and the U.S. Virgin Islands.
A quote from the letter sent to Representative Velasquez’s office on September 17th states:
This deal is unprecedented in that it effectively transfers U.S. tax dollars directly to a foreign company, with Diageo slated to receive almost half of all Cover Over revenues generated by the sale of rum produced at the facility. The almost $6 billion in direct payments over 60 years for only 40 jobs is equivalent to $2.5 million per job per year.
We applaud and support the National Puerto Rican Coalition in its continued effort to educate legislators on the untenable deal and persuade government authorities to look into practices which encourage corruption and misappropriation of U.S. Taxpayers’ money.
The letter to Congresswoman Velasquez can be found here.
originally posted by the Washington Times:
We may be witnessing the single worst example of corporate welfare in a generation. With all due respect to the crowd favorite, Archer Daniels Midland, the new contender essentially could give its product away and still make a profit – thanks to the generosity of the American taxpayer.
At the heart of the rip-off is a policy known as the “cover over” tax subsidy, which provides Puerto Rico and the U.S. Virgin Islands (USVI) a rebate on the federal excise taxes U.S. consumers pay when they buy rum produced in those territories. There are virtually no restrictions on the use of the money – though Puerto Rico currently uses 94 percent of the revenues to support investments in infrastructure, health, education and environmental preservation. (The additional 6 percent is spent on marketing for the island’s rum industry.)
To increase its revenue from the program, the Virgin Islands’ government two years ago signed an agreement with the British liquor conglomerate Diageo in which the company agreed to move its Captain Morgan rum distillery from Puerto Rico to USVI. Under the agreement, which makes the federal government‘s policy of paying farmers not to grow crops look penurious, the USVI government will give Diageo nearly half of all cover-over revenues generated by Captain Morgan sales. Read the rest of this entry »
Written by Alan Bromley – Staff Writer New Patriot Journal
Wrapped inside the Troubled Asset Relief Program (TARP) lies a provision that gives a British rum-making corporation, Diageo, a tax break of $2.7 billion to move their facilities from Puerto Rico (where they resided for 30 years) to the U.S. Virgin Islands – and Puerto Rican politicians and activists are up in arms, finding Congress unwilling to make the tax laws comparable in both places, and even unwilling to be transparent about which politicians in Congress, if any, may have benefitted from the unusual tax break.
But they do know that embattled New York Congressman Charlie Rangel (D) as (past) chairman of the Ways & Means Committee, refused Read the rest of this entry »