Puerto Rico Update Week of January 31st 2018

Following State of the Union backlash, FEMA reverses announcement on continued delivery of aid to Puerto Rico

During his first State of the Union Address, President Trump mentioned the victims of Hurricane María and declared his love for its victims. That pronouncement set off a backlash among Democratic Members of Congress—notably Senator Bernie Sanders (I-VT), and Congresswoman Nydia Velázquez (D-NY)—who decried the disconnect between the President’s speech and the Federal Emergency Management Agency’s (FEMA) decision to stop delivering food and water to Puerto Rico. Since Trump’s speech, FEMA has announced a reversal of its decision and will begin sending its remaining stockpile of aid to Puerto Rico.

Puerto Rico suicide rate jumps in wake of Hurricane María

A new study by the Commission to Prevent Suicide indicates that there was almost one suicide per day in November in Puerto Rico. Overall, the study concludes that there were 227 suicides in 2017, which is 16 percent more than in 2016. Close to 40 percent of Puerto Ricans still have no electricity and experts warned that without basic necessities like shelter and water, increased rates of suicide becomes more common. The Commission to Prevent Suicide is part of the Puerto Rico Department of Health.

Rosselló Administration proposes tax reform

Governor Ricardo Rosselló announced that he will soon send a bill to the Legislature to reform Puerto Rico’s tax system. The proposal would drastically cut corporate and individual taxes. Corporate rates would be cut by 10 percent, while individual rates would go down by 6 percent. In addition, the Governor’s proposal is expected to cost $956 million in revenue.

The proposal includes measures to offset the revenue losses, taxing retail e-commerce, and increasing taxes on medical marijuana, which among other measures would raise revenues by $415 million. The plan also calls for the reduction of the SUT to 7% for food, and for the eventual elimination of the business-to-business tax and the SUT altogether. The tax plan would also revise property appraisal methodologies for the first time in decades, in the hopes of raising an additional $395 million.

Treasury Secretary Raúl Maldonado said that under the proposal, up to 500,000 individuals would not have to file tax returns.

Senate bill would allow territories to cancel debts

Senators Elizabeth Warren (D-MA), Bernie Sanders (I-VT), and Kirsten Gillibrand (D-NY) will soon introduce a bill that would allow the U.S. territories, including Puerto Rico, to cancel their public debts. Under the outline of the proposed legislation, Congress would authorize the territories to request debt cancellation. Under the plan, a $15 billion “creditor compensation fund” would be created for individual investors who reside in Puerto Rico. Some of the money would be used for credit unions and other small institutions. Retail investors in the U.S. would be eligible for the compensation, but not hedge funds and similar financial institutions. Puerto Rico’s public debt has accumulated to a total of $70 billion.