Senator Hatch Introduces Proposal, Suggests Reforms for Puerto Rico

U.S. Senate Finance Committee Chairman Orrin Hatch (R-UT) this afternoon criticized the administration of Puerto Rico Governor Ricardo Rossello Nevares, the PROMESA Financial Oversight and Management Board, and recent statements of former Obama Administration officials regarding aid for the territory – with his harshest criticism directed at the Rossello Administration.

Hatch began a statement on the Senate Floor regarding the bill that he introduced Thursday with Senator Marco Rubio (R-FL) that would cut payroll taxes 50% for Puerto Ricans for two years, extend the refundable portion of the Child Tax Credit to Puerto Ricans with one child or two children,  empower the SEC to regulate investment funds limited to Puerto Rico, provide a number of benefits to small businesses in the islands, and include the territory in the Current Population Survey and study inclusion in other Federal data collection programs.

Provisions in the bill were recommended by PROMESA’s Congressional Task Force on Economic Growth in Puerto Rico which he chaired and on which Rubio served.

The Finance Committee Chairman estimated that the bill would inject $3.5 billion into the territory’s economy.

Hatch also discussed other Puerto Rico issues unrelated to his proposal. He explained that he voted for PROMESA because “Puerto Rico’s fiscal irresponsibility needed to be stopped and a promise of limiting litigation was inviting.” He went on to point out, however, that the “law has failed to prevent a tidal wave of litigation, as was promised.”

In addition, he said, “the promise of voluntary debt resolution has not been fulfilled, even for a restructuring agreement between creditors and Puerto Rico’s power authority.”

He expressed disappointment with the PROMESA Financial Board’s oversight of the territory’s budget, observing that, “it seems that the Oversight Board has largely been operating in the dark” and has been too dependent on the insular government for information.

“I am not without hope,” he went on, judging that the Board “has recently been slightly more aggressive in its demands for transparency.”

The Finance Committee Chairman noted that he has been “waiting nearly three years” for audited financial statements for the territorial government for the period after June 30, 2014.

He also criticized the Rossello Administration for “potentially politicizing” the insular government Institute of Statistics but his strongest criticism was of the Governor’s proposal to exempt income of foreign subsidiaries of manufacturers from the States from any Federal taxation.

He insisted that a “tax haven” would not be created in the territory and “the proponents do not understand recent history,” which included several Federal laws and regulations intended to prevent companies from avoiding taxation through Puerto Rico on income derived from work in the States.

Hatch also took issue with former Obama Administration officials who continue to push their proposal to have the Federal government give Puerto Rico a $600 million a year grant to re-establish a local earned income tax credit program. He expressed concern about territorial government administration of such funds.

 

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