Puerto Rico, whose credit rating is one step above junk, collected $110 million more revenue last month than it budgeted, according to preliminary results from the island’s Treasury Department.
The self-governing commonwealth of 3.7 million people took in $856 million of revenue in October, about 15 percent more than forecast, as corporate-tax receipts were better than expected, Treasury Secretary Melba Acosta said in a statement. Final results will be released this month.
The island had $120 million more revenue than projected for the first four months of fiscal 2014, which began July 1, according to initial revenue counts.
“The increase in revenues was mostly attributable to the new measures that were approved earlier this year, such as the revision of the corporate rate taxes and revenues generated by the gross-profit tax,” Acosta said in a statement.
The fiscal health of Puerto Rico affects the $3.7 trillion municipal bond market because more than three-quarters of U.S. muni mutual funds hold the island’s obligations, according to Morningstar Inc. (MORN) The securities are tax-exempt nationwide.
Governor Alejandro Garcia Padilla, 42, who took office in January, boosted businesses taxes to help balance the fiscal 2014 budget. Preliminary corporate tax receipts in October total about $239 million, $116.5 million more than estimated.
While revenue collections are above budgeted projections, the island’s economy is projected to shrink by 0.8 percent in fiscal 2014, a reversal from an earlier estimate calling for an expansion, according to Puerto Rico’s Planning Board, which calculates the commonwealth’s economic growth.
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