Puerto Rico's Fiscal Board Is Taking Advice

A listening session convened on Thursday by Puerto Rico's fiscal oversight board was sparsely attended despite the broad powers it has to write the island's financial future. Puerto Rico faced an 11-year recession and $70 billion in debt before Hurricane Maria's direct hit this fall. Its outlook now is even more challenging.  

Tax policy experts urged board members of The Financial Oversight and Management Board of Puerto Rico to press Congress to change a piece of the massive tax bill that would impose a 20 percent tax on offshore operations. The tax would be a "triple catastrophe" for the island, according to Dr. Jose Caraballo Cueto, an economist at the University of Puerto Rico.

He says the tax proposals in Washington would be a “triple catastrophe” and he urges the board to be an advocate for the following in Congress pic.twitter.com/HUs8Fim6Lf

— AlanaCasanovaBurgess (@AlanaLlama) November 30, 2017

But Christian Sobrino,  the governor's representative on the board, told WNYC he didn't expect members to be “advocating for or against” the tax plan in Congress. The governor, he said, was pushing for statehood as the ultimate solution.

“If they [board members] meet with anybody in Congress, I would expect them to push a treatment that is beneficial for the island,” he said. “That should be their ultimate interest, and not necessarily tie any of that type of help to added power or other measures that are strictly related to the power.”

Three of the six members who attended the San Juan meeting did not return for the afternoon session. Executive Director Natalie Jaresko, whose $625,000 salary has been the focus of much criticism in Puerto Rico, also left before the public comment period at the end of the meeting.

And now the head of the junta board, Natalie Jaresko, has left early as well. She will miss the public comment period. This is the oversight board listening session: @WNYC pic.twitter.com/fxP4Imw8Zj

— AlanaCasanovaBurgess (@AlanaLlama) November 30, 2017

The board consists of seven members appointed by the President of the United States and one ex-officio member named by the governor of Puerto Rico, the seat currently filled by Sobrino.

In the session on taxes, panelists pushed for a lower corporate tax rate to attract and keep companies in Puerto Rico.

A panelist had cited a 39% tax rate in P.R. as an argument for tax incentives for companies. There’s pushback now to that, too. The effective rate seems to be 7 (SEVEN) on average, not 39.

— AlanaCasanovaBurgess (@AlanaLlama) November 30, 2017

But one expert noted that the average tax rate for corporations in Puerto Rico was 7 percent, and that it had become commonplace for the government to give away tax incentives without following up on the effects to the economy.

Jaresko, the board’s executive director, agreed that taxes were necessary to fund schools and to maintain “the rule of law.”

The third and final listening session will be held Monday in Manhattan, and a public meeting on Tuesday is also scheduled in New York City. Those interested in attending must register here by 5pm on Friday.