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Ex-‘Commonwealth’ Party US Affairs Head: “Colony’s” ‘Tax Autonomy’ Not Real

The former Federal affairs director for the ‘commonwealth’ party’s leading champion of Puerto Rico’s current political status wrote last week that the status does not provide the autonomy from Federal control on tax matters its supporters claim.

Jose Ortiz-Daliot, who was Director of the Puerto Rico Federal Affairs Administration under Governor Rafael Hernandez Colon, also termed the current status “colonial.”

Ortiz-Daliot, who later served as a ‘commonwealth’ party member of the Commonwealth Senate, made the point in advocating ‘free association’ with the U.S. for the territory. A freely associated state is a nation in an association with another nation that either nation can end.

A number of leaders of the ‘commonwealth’ party now favor free association but most want the U.S. to continue to grant citizenship in a freely associated nation of Puerto Rico. This would contradict U.S. policy on citizenship, which requires primary loyalty to the U.S. over any other nation.

And some want the association to be permanent — which would contradict the definitions of free association as well as nationhood.

But the sentiment in the party for some nationhood status linked to the U.S. is so substantial that Governor Alejandro Garcia Padilla last week could not get its Governing Board to agree to Hernandez Colon’s proposed “commonwealth’ status.”

Under the former Governor’s proposal, the U.S. Congress would give up its powers to govern the territory on local matters and to levy taxes in Puerto Rico. Federal officials have said that such proposals are impossible because a Congress, which has a life of two years, cannot give up the powers that the U.S. Constitution gives future Congresses.

Ortiz-Daliot used the example of Hernandez Colon’s failed effort to negotiate a tax treaty with Japan. He wrote that it “eliminated … the alleged fiscal autonomy or tax sovereignty of the Commonwealth.”

Under the proposal, neither the Government of Japan nor Puerto Rico’s territorial government would have taxed the Puerto Rico income of Japanese companies, resulting in what Ortiz-Daliot termed a “windfall” for the businesses.

When Governor Hernandez Colon proposed the treaty to Japan in 1986, its government asked Puerto Rico’s national government — the Government of the U.S. — if it would mind the Japan negotiating a tax exemption agreement with the local government of one of its territories.

The U.S. Government did object through U.S. Secretary of State George Schultz.

Ortiz-Daliot wrote that it objected through “the exercise of the colonial power granted by the Territorial Clause of the Federal Constitution,” Hernandez Colon, however, still refuses to recognize what former top representative Ortiz-Daliot wrote is the “colonial reality of Puerto Rico under the territorial commonwealth.”

“It was the colonial nature of our political relationship with the United States that was responsible for the humiliation Puerto Rico suffered at the hands of Secretary Schultz when, at the last minute … Puerto Rico was denied authorization, “ Ortiz-Daliot wrote.

The former representative explained that the Commonwealth had “the right to enter into a tax treaty with Japan … in theory … because one of the attributes that the current Commonwealth has is called tax fiscal autonomy or sovereignty.”

But “a long process of negotiation between” the Commonwealth government and the U.S. State Department failed to convince Federal officials that Puerto Rico had the claimed autonomy and the right to enter into a binding agreement with a foreign government.

He added that Schultz said the tax exemption plan contradicted Federal policy.

“[T]ax fiscal autonomy and sovereignty … after the failed effort with Japan “ is a “legal abstraction: a right on paper without an effective result,” Ortiz-Daliot commented.

“If, however, Puerto Rico would have had full sovereignty under a Compact of Free Association Agreement” the tax exemption agreement “with Japan would be a reality today,“ he continued.

Ortiz-Daliot contended, “The situation of still being still under the Territorial Clause of the Constitution of the USA is what explains the need for ‘approval of the metropolis’ under the current commonwealth, and why we need a truly sovereign free association or commonwealth.”

In Puerto Rico’s only plebiscite on political status limited to only possible options held along with the 2012 elections, 33.3% of the vote was for “Sovereign Commonwealth” as the alternative to the current territory status, which was rejected by a majority of the vote. U.S. statehood won the plebiscite with 61.2% of the vote.





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