Puerto Rico evaluates the consequences for the island of the US tax reform

Puerto Rico evaluates the consequences of the approval by the House of Representatives of the United States, on Thursday, of a project aimed at reforming the tax system that is feared harms the economy of the island.

San Juan, Nov. 17 (EFE) .- Puerto Rico is evaluating the consequences of the approval by the House of Representatives of the United States, on Thursday, of a project aimed at reforming the tax system that is feared to harm the economy of the island.

Puerto Rican economists and analysts agree today that the initiative, if ratified in the US Senate, It will be a serious blow to the weakened local economy, which is trying to recover from the devastating effects of hurricane Maria that devastated the island and that must deal with an unpayable debt of close to 70,000 million dollars.

US President Donald Trump defends this tax reform as a fundamental tax rebate to revitalize economic activity and accelerate US annual growth fiscal includes a 20% tariff for products exported to the United States -in this case from Puerto Rico-, threatening the industrial base of the island.

Tax reform includes that 20% tax on sales of products manufactured by Foreign Control Corporations (CFCs), including those of Puerto Rico, when they are acquired by their parent companies in the United States. United.

The Government of Puerto Rico understands that this tax on American companies that manufacture on the island may discourage their stay in the Commonwealth, which It would be a real disaster for an economy already in a "coma" for the billions of dollars of losses caused by Hurricane Maria.

The cyclone left a path of destruction that the governor, Ricardo Rosselló, quantified over 80,000 million dollars, taking as source a credit assessment agency, to which the debt is added, currently in the process of restructuring under the supervision of a federal judge.

Professor of Economics at the University of Puerto Rico José Alameda told Efe today about the matter that, if the bill is ratified by the Senate, it will increase the cost of products manufactured on the Caribbean island that end up in the US market.

"Companies - if approved the project - could value their exit from Puerto Rico, "said the economist, for whom another possibility is that having to pay higher taxes for introducing their products in the US. reduce their production, which would mean in the long run a reduction of much needed jobs on the island.

Alameda said that in this new scenario companies, to remain in Puerto Rico, could demand new fiscal advantages to the Government of the island, which would mean, in short, lower collection for the public coffers of the Commonwealth.

Economist stressed that the whole problem arises from the Washington authorities consider, in fiscal terms, Puerto Rico as a foreign country, something that he remarked "is not good", less in the financial aspect.

The governor, Ricardo Rosselló, the representative of Puerto Rico before the US Congress; and the employers Association of Industrialists make common front against this tax collected in the tax reform of Donald Trump on the sales of products manufactured by the CFCs in the abroad, which includes Puerto Rico.

US Treasury Secretary Steven Mnuchin said today that he expects the Senate to vote on its tax reform bill after Thanksgiving. so that Trump can sign the law before Christmas.

After overcoming the passage of the House of Representatives, all eyes are on the Senate, which negotiates a proposal parallel, with some modifications, where more obstacles are expected because the Republicans have a smaller majority.

Tax reform, one of the main promises The electoral campaign that Trump did during the campaign, includes a reduction of the corporate tax from 35% to 20%, and reduce the tax brackets from the current seven to four.