Blog » And Puerto Rico isn't the only 'developing country' within US jurisdiction.

And Puerto Rico isn't the only 'developing country' within US jurisdiction.

Created Dec 04 2014, 10:06 AM by Tom Cochran
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The following is Frank Shafroth's latest summary of sub-national finance machinations in PR:


Rethinking State Tax Policies & Transportation Finance.


The FBI yesterday charged the Puerto Rico Highways and Transportation Authority Treasurer Silvino Cepeda-Ortiz with accepting bribes―just one day after the Puerto Rico House of Representatives had passed a bill bringing Puerto Rico closer to selling a $2.9 billion bond to support the authority. Mr. Cepeda-Ortiz was charged in United States District Court in San Juan with bribery concerning programs receiving federal funds: according to U.S. Attorney Rosa Emilia Rodríguez-Vélez in Puerto Rico, he solicited and received two kickbacks of $5,000 each for contracts with the authority. Ms. Rodríguez-Vélez stated: “Public officials who abuse their positions of trust for personal financial benefits, undermine the integrity of our public agencies and the availability of federal funds used to finance important projects, such as our highway infrastructure…We will not relent in our efforts to combat this type of corrupt scheme, whereby a public official requests bribes in order to pay for services duly rendered by third parties to an agency.”

The arrest came in the wake of an FBI raid last week on the Puerto Rico Aqueduct and Sewer Authority headquarters in which no arrests were made and in the wake of this week’s action by the Puerto Rico House of Representatives to pass, 26-23, a bill to prop up the transportation authority through an oil tax increase. (The tax raise will increase taxes per barrel of oil to $15.50 from $9.25.) Currently all the tax goes to the PRHTA. Revenue from the new higher tax would go to the PRHTA, the Puerto Rico Infrastructure Finance Authority and the Integrated Transportation Authority, which operates Puerto Rico’s public transportation. If the legislation is adopted by the Senate and signed into law, Puerto Rico will replace its existing sales and use tax with a value added tax, paving the way for the territory to finance its commitment to eliminate income taxes for individuals with incomes of less than $35,000 or families with incomes less than $70,000.If adopted, in future years the tax would be adjusted upward for inflation."