April 11, 2019, San Juan, Puerto Rico—The nonprofit organization Espacios Abiertos (EA), in a public hearing before the Treasury Committee of the Puerto Rico Senate today, asserted that the two tax bills being considered by the chamber—the Tax Incentive Code (SB1013) and the System of Integrated Tax Credits (HB1880)—lack basic elements of transparency, accountability and citizen participation.
In testimony about bills SB1013 and HB1880, EA put forth four proposals to ensure citizen access to all relevant information regarding these measures, exempting any confidential taxpayer information:
- The Tax Incentives Code must publish the Annual Report on the Effectiveness of Incentives and a Budgetary Report on Economic Incentives. Likewise, the System of Integrated Tax Credits must publish an annual public report detailing any sale of tax credits.
- Both bills must fully evaluate all existing tax incentive laws in Puerto Rico.
- The bills must justify the continued application of tax laws and programs that lead to a negative return on investment for the government.
- Both bills must divulge the total annual cost of all tax incentives and concessions, which according to data from the Department of Economic Development and Commerce of Puerto Rico (DDEC) is close to $7.5 billion and constitutes 86% of the Puerto Rico government’s general yearly budget.
Regarding HB1880, EA Senior Policy Analist, Daniel Santamaría Ots, emphasized that the bill’s proposed platform would only track $250 million in yearly expenditures and keep hidden the remaining outlays that make up the Puerto Rico government’s $7.5 billion yearly budget.
Additionally, Santamaría Ots highlighted that the Senate’s proposed Tax Incentive Code would only make public between $450 and $500 million a year, also failing to address the bulk of the $7.5 billion budget.
In his recent testimony to the Puerto Rico House of Representatives Committee on the Treasury, Budget and Supervision, Administration and Economic Stability of Puerto Rico, Santamaría Ots stated that the proposed Tax Incentives Code omits any fiscal analysis of 18 of the 76 laws related to tax expenditures, which constitutes a lack of transparency.
These omissions keep the costs and benefits of Puerto Rico’s tax incentives invisible to the public.
Santamaría Ots highlighted that citizen participation is indispensable for the development of any incentives-based law that impacts the Puerto Rico government’s general fund, also noting that the public must be able to access all documents produced by these laws in order to participate in the public debate.