Puerto Rico Lawmakers to Seek Sales-Tax Boost, House Member Says

Puerto Rico lawmakers will push for spending cuts and an increase in the sales tax as part of a plan to revamp the junk-rated commonwealth’s taxes, according to the chairman of the island’s House Treasury Committee.

Legislators are set to meet with Governor Alejandro Garcia Padilla Thursday morning to negotiate a tax-overhaul measure. Senate and House members want to boost the island’s 7 percent sales tax while the governor prefers introducing a value-added tax, Representative Rafael “Tatito” Hernandez said in a phone interview from San Juan.

Puerto Rico faces a $191 million budget deficit in the fiscal year ending June 30 and must pay $630 million to bondholders July 1. Lawmakers have less than seven weeks to approve a spending plan for next fiscal year. To raise revenue, the legislature prefers to tap a levy that already exists rather than creating a new funding source, Hernandez said.

“Certainty for us is a big issue,” he said. “We just want to get out of the hole. So it has to be something that’s doable, that’s simple.”

If the governor and lawmakers reach an agreement Thursday, they will then determine how soon the House can vote on a measure, Hernandez said.