Retail giant Walmart is the largest private employer in Puerto Rico, employing more than 10,000 full time associates at an average wage topping $11.00 an hour, plus thousands more people in part-time positions. Walmart has 55 retail units in Puerto Rico, counting Amigo stores, Sam’s Club, Super Ahorros, and Walmart stores, and it spends $1.6 billion dollars with suppliers for those stores, supporting 41,676 jobs, many of which are on the island. Walmart pays more in sales taxes than any other business in Puerto Rico — more than $100 million a year — and they donated $4.6 million on the island in 2014.
Puerto Rico, in desperate fiscal circumstances with debts of more than $72 billion, saw an opportunity to raise some additional revenue. The government more than doubled the taxes, according to CNN, of all companies in Puerto Rico with revenues over $2.75 billion a year. In other words, Walmart.
Walmart claims that they will now have to pay more than 91% of their net income in sales taxes. This is triple the average amount Walmart pays worldwide, and the company describes it as an “astonishing and unsustainable” increase. Walmart is also concerned that if they make those payments and try to work with the government to adjust the taxes or to work through local courts, Puerto Rico will not be able to pay back excess taxes Walmart pays in while the matter is being resolved.
Walmart’s solution? Sue Puerto Rico in federal court. If this is not successful, Walmart says, the chain is prepared to leave Puerto Rico.
“While we understand Puerto Rico’s economy is facing tough times and sacrifices need to be made, a Walmart spokesperson is quoted as saying, “we are part of the solution and should not be punished for being the largest private employer on the island and one of the largest contributors to its economy.”
Walmart has shown in the past that they are willing to pick up their marbles and go home if they believe they are being treated unfairly. The potential loss for Puerto Rico is significant.