CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. Puerto Rico Struggles To Avoid Raising Sales Tax Rate

Puerto Rico Struggles To Avoid Raising Sales Tax Rate

by Mike Godfrey, Tax-News.com, Washington

01 October 2009


The government of Puerto Rico dismissed nearly 17,000 public employees last week at the behest of the Joint Economic and Fiscal Reconstruction Board (JEFB) in a move to hold back a fiscal deficit which is approaching USD3.2bn. Luis Fortuño, Puerto Rico's governor, claimed that the alternative would have been a 3% hike in sales tax from 7% to 10%.

This is the second round of layoffs this year and the largest ever in Puerto Rico's history. The first involved about 4,500 employees. This second phase, said Carlos Garcia president of JEFB, affects another 16,470 employees. In all 16,970 letters of dismissal were sent out, but 500 employees will be rehired immediately by the Treasury Department for extra tax debt collection work. Education received the heaviest cuts - 7,249 workers lost, or 10% of the workforce.

This new round of layoffs, whilst substantial, is still likely to fall short of meeting the government target of USD2bn in expenditure cuts - savings to date have reached USD1.2bn. Garcia predicted that the balance of savings will come from more reorganizational economies in the government, USD200m from health care, and additional reductions in government contracts. The unemployment rate in Puerto Rico has now grown to 17.1% and the unions have called for a day of protest in mid October.


To see today's news, click here.

 















Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »



Stay Updated

Please enter your email address to join the Tax-News.com mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.


To manage your mailing list preferences, please click here »