Why Puerto Rico froze tax credits, explained
The Puerto Rican government announced that it is freezing all future tax credits. Additionally, a further $2 billion in funds were frozen in order to promote the cash flow and stabilize the budget.
These measures were likely taken to create more time to analyze the tax credits and evaluate the ones that seem more beneficial financially. Puerto Rico Secretary of the Treasury Raul Maldonado noted that his department will work to evaluate any tax credit worth over $140 million.
“We want to analyze what kind of credits are really being awarded,” noted Maldonado.
He further stated that the credits will be paid over a longer time period, believed to be during the course of 4 years.
Furthermore, the control board is freezing a total of $1.8 billion dollars in funds in hopes to save $625 million. Elias Sanchez, representative of the governor, added that a majority of the expenses, which were set by the previous administration are unknown. To find out the reasons and the applications of these expenses, the committee will investigate the sources.
“That’s why Puerto Rico is dragging such extraordinary deficits,” said Sanchez, criticizing the actions of the previous administration.
On the other hand, the opposition responded to these strict measures by asserting that the non-profit organizations, who would have received support from the frozen funds, will be negatively affected as a consequence.
Puerto Rico’s governor Rossello has requested that a stay on lawsuits be extended for another year, so officials can further evaluate creditors amid continuing multimillion-dollar defaults.