Puerto Rican officials are taking Washington by storm in a fight against the recent U.S. tax reforms which they say endanger the livelihoods of over 250,000 factory workers on the island.
Puerto Rican Senatorial president Thomas Rivera Schatz and House President Carlos 'Johnny' Mendez Nunez met with regional officials to address the dangers attached to the new taxation reforms which were passed earlier this month.
"The fiscal reform is bad for Puerto Rico and that our colonial condition has put the island at a disadvantage to the point that they want to impose taxes that severely affect our economic initiative," Rivera said.
The Puerto Rican officials reminded the assembly of the struggles the country has faced in rebuilding its economy, even with the almost a trillion dollars in debt and pension liabilities and the loss of almost 32,000 jobs due to Hurricane Maria, which hit the island on September 20th.
“Many of the Congress members on the Hill, they don’t understand how our economy works,” said Manuel Laboy, Puerto Rico’s secretary of economic development and commerce.
According to the reforms, Puerto Rico will be considered a foreign territory and U.S. companies conducting business on the island will be required to pay an increased tax of 20 percent on top of the US 14 percent imposed on the total profits.
Prior to the policy, U.S. drug manufacturers were able to create offshore companies on the territory, avoiding income taxes and hefty payments to the Internal Revenue Service, IRS, while still marketing their products as U.S. made.
The arrangement suited both parties, creating thousands of jobs for Puerto Ricans and contributing to 10 percent of the U.S. drug market while providing drug giants with a profit margin in the trillions.
“You’re talking about an industry that is really the backbone of the economy,” Laboy said.
For the drug manufacturing industry, a pillar in Puerto Rico’s economy, with the changes to the tax requirements, the benefits of doing business on the island disappear.
"The reform endangers 250,000 jobs and between 22 percent and 30 percent of the total tax revenue," said Governor Ricardo Rossello, adding that the disastrous reforms could have been avoided if the territory was provided proper representation in Congress.
"Those of us who believe in full equality cannot accept that in a condition of inequality we continue to be removed and punished," Rivera said.
"We are going to all go to Washington so that the message arrives to the Congress that has to treat us like the American citizens that we are,” Mendez said in a press release. “There could be no economic development on the island with this new tax,” the minister said.
The Puerto Rican official continued, saying the delegation plans to lobby that the Bipartite Congressional Working Group for Economic Development of Puerto Rico be reviewed in Congress. The 125-page report, released in December 2016, deals with sustained economic development, the creation of jobs and addresses the island’s fiscal crisis.