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/ Wednesday, February 16, 2022
Puerto Rico’s Future Is not Built on Tax Exemptions
Argues business strategist David Allio By Zoe Landi Fontana, The Weekly Journal
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sustainable future starts with a doing away with leadership’s rhetoric of over-promising and delivering mistakes that are paid in dollars and lead to being $132 billion in debt. That is according to business strategist David Allio, who adds that fortunately, the new Plan of Adjustment submitted by the Financial Oversight and Management Board (FOMB) brought the price for debt services down to 25 cents to 8 cents on the dollar. With the framework in place, it is now up to Puerto Rico to stick to the path provided by Jaresko and the new Plan of Adjustment to build towards a future without promises it can’t afford. Puerto Rico “needs to seriously balance its priorities in terms of the allocation of the finite resources that exist,” Allio said in an interview with THE WEEKLY JOURNAL.
The Danger of Quick Fixes
The teachers’ protests from the last week show how the government jumps to quick fixes in a pinch. After not receiving a raise in about 6-7 years, there is no doubt that teachers deserve one, but the resources aren’t there. What began as a pension discussion became a promise for a permanent
annual raise of $1000. “It is frightening and downright depressing to think that Puerto Rico could lose its best and last chance to finally reach sustainability and selfdetermination,” Allio said of the protest’s results. “As well as ceasing unbudgeted raises and pensions, the island needs to address its current offerings for investment and growth.”
to create significant growth.
Law 60
According to Allio, Law 60, for attracting revenue to the island, is akin to building a house on sand. “Using the tax system to attract is not necessarily sustainable because you’re giving away what you need to further develop not only those industries, but your society,” he explained. Law 60 and A Future Crypto the social rhetoric surrounding it also Heaven? creates new problems Various organizations for the government, and have touted the a dual society of those possibility for Puerto who benefit, and those Rico to become a Silicon who don’t. Valley-esque technology Another issue is what hub, especially for these businesses will do those involved in the if the global minimum blockchain and crypto tax rate is set at 15%, industries. Blockchain which could take effect has real-world by 2023. “Puerto applications for tracking Rico has granted so assets, shipments, and – David Allio, Business Strategist many exemptions in even legal documents so many industries, and certifications. The some grandfathered, technologies that run on some new, and it the blockchain –cryptocurrencies and NFTs– are less dependable, their values not backed by any country will be a difficult conversation to reevaluate and restructure them to enable Puerto Rico to come or finite resource. into compliance with what the US and other nations At the end of January, Bitcoin dropped by 50% agree on as a minimum tax threshold,” Allio argued. from its all-time high. So, the repercussions of Over time, the tax exemptions granted have had a the unpredictability of cryptocurrencies, along regressive effect. Excise and sales taxes, of which with the fact that NFTs’ values are fairly arbitrary, Puerto Rico has some of the highest in the country, might make this sector of technology and finance affect lower income groups the most. a less than desirable target to bring to the island
Using the tax system to attract is not necessarily sustainable because you’re giving away what you need to further develop not only those industries, but your society.
