Treasury revenue shortfall increases to $121.7 million
Puerto Rico government revenue fell short of expectations in February, missing estimates by $6.5 million and pushing the cumulative shortfall for fiscal 2015 to $121.7 million, the Treasury Department reported Friday.
Treasury revenue shortfall increases to $121.7 million
Sales & use tax (IVU by its Spanish acronym) revenue totaled $102.8 million in February, $14.7 million short of estimates, and tax revenue targets were also missed for alcoholic beverage tax revenue ($3.9 million short), cigarettes ($2.4 million), motor vehicles ($14.1 million), rum rebate ($12.3 million) and other revenue ($6.3) million.
The poor showing in these categories was offset by better than anticipated revenue from offshore affiliates of multinational manufacturers operating in Puerto Rico, or Act 154 taxes, which totaled $211.4 million, $30.4 million above expectations and individual income tax revenue, which totaled $158.5 million in February, $10.6 million above expectations, and corporate income tax, which totaled $37.8 million, $2 million above estimates.
For the year-to-date period, general fund net revenue is running $121.7 million below estimates, with IVU revenue missing targets by $70.6 million, Act 154 revenue coming up $65.9 million short and corporate tax revenue running $29.8 million short.
During the first eight months of fiscal 2015, the largest shortfall is from motor vehicle tax revenue, which is running $74.7 million below estimates. Other taxes missing revenue projects include alcoholic beverages ($12.5 million), cigarettes ($6.2 million) and rum ($26.6 million).
Treasury Secretary Juan Zaragoza said the government will try to close the gap through the filing of legislation (H.R. 2316) that aims to raise revenue through allowing the prepayment of a special tax on certain transactions at preferential rates.
Zaragoza said the bill is expected to be passed into law in the coming days, which is expected to raise $160 million. One of these transactions will be a prepayment, at a reduced rate of 5% or 8%, of taxes on corporate dividends for future distributions of accrued benefits and profits. It also provides a window to prepay individual retirement accounts (IRAs) and Educational Contribution Accounts until March 31, 2015. This will provide alternatives to taxpayers, and encourage retirement and education savings, while also providing tax relief, he said.
In addition, the bill provides an incentive plan to pay debts for income, estate, gift, excise, and sales and use taxes, as well as employer withholdings. The bill also establishes an incentive plan for voluntary disclosure of income and payment of the corresponding taxes. The deadline to benefit from this incentive plan and make payments will be June 30, 2015.
With government liquidity running short, and the end of the fiscal year on June 30 looming, the government is expected to move ahead with a bond issue of $2.95 billion, which will wipe a $2.2 billion loan to the Highways & Transportation Authority from the Government Development Bank’s books, increasing its liquidity and ability to lend to other government entities should revenue run short for the balance of the fiscal year.
The plan
The Infrastructure Financing Authority (Prifa by its Spanish acronym), will issue two-year notes at a 8.25% interest rate, according to a filing with the Municipal Securities Rulemaking Board. Prifa will then undertake a $2.9 billion bonds issue to pay them back with proceeds of the petroleum-tax revenue increase that takes effect Sunday.
Earlier this week, lawmakers made technical amendments to legislation authorizing the tax hike and bond deal to make it more attractive to market. The changes include an adjustment clause that would automatically hike the petroleum tax in the future should revenue fall short of making the bond payments in any given year.
By : JOHN MARINOThe poor showing in these categories was offset by better than anticipated revenue from offshore affiliates of multinational manufacturers operating in Puerto Rico, or Act 154 taxes, which totaled $211.4 million, $30.4 million above expectations and individual income tax revenue, which totaled $158.5 million in February, $10.6 million above expectations, and corporate income tax, which totaled $37.8 million, $2 million above estimates.
For the year-to-date period, general fund net revenue is running $121.7 million below estimates, with IVU revenue missing targets by $70.6 million, Act 154 revenue coming up $65.9 million short and corporate tax revenue running $29.8 million short.
During the first eight months of fiscal 2015, the largest shortfall is from motor vehicle tax revenue, which is running $74.7 million below estimates. Other taxes missing revenue projects include alcoholic beverages ($12.5 million), cigarettes ($6.2 million) and rum ($26.6 million).
Treasury Secretary Juan Zaragoza said the government will try to close the gap through the filing of legislation (H.R. 2316) that aims to raise revenue through allowing the prepayment of a special tax on certain transactions at preferential rates.
Zaragoza said the bill is expected to be passed into law in the coming days, which is expected to raise $160 million. One of these transactions will be a prepayment, at a reduced rate of 5% or 8%, of taxes on corporate dividends for future distributions of accrued benefits and profits. It also provides a window to prepay individual retirement accounts (IRAs) and Educational Contribution Accounts until March 31, 2015. This will provide alternatives to taxpayers, and encourage retirement and education savings, while also providing tax relief, he said.
In addition, the bill provides an incentive plan to pay debts for income, estate, gift, excise, and sales and use taxes, as well as employer withholdings. The bill also establishes an incentive plan for voluntary disclosure of income and payment of the corresponding taxes. The deadline to benefit from this incentive plan and make payments will be June 30, 2015.
With government liquidity running short, and the end of the fiscal year on June 30 looming, the government is expected to move ahead with a bond issue of $2.95 billion, which will wipe a $2.2 billion loan to the Highways & Transportation Authority from the Government Development Bank’s books, increasing its liquidity and ability to lend to other government entities should revenue run short for the balance of the fiscal year.
The plan
The Infrastructure Financing Authority (Prifa by its Spanish acronym), will issue two-year notes at a 8.25% interest rate, according to a filing with the Municipal Securities Rulemaking Board. Prifa will then undertake a $2.9 billion bonds issue to pay them back with proceeds of the petroleum-tax revenue increase that takes effect Sunday.
Earlier this week, lawmakers made technical amendments to legislation authorizing the tax hike and bond deal to make it more attractive to market. The changes include an adjustment clause that would automatically hike the petroleum tax in the future should revenue fall short of making the bond payments in any given year.
Treasury revenue shortfall increases to $121.7 million
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