SAN JUAN (Reuters) - Lawmakers in Puerto Rico resisted efforts to raise a tax on crude oil at a planned 68 percent on Monday, arguing for amendments to the bill they said would soften the blow of the tax that the U.S. commonwealth needs to raise up to $2.9 billion in crucial financing.
Governor Alejandro Garcia Padilla had threatened to shut down the island’s public transit network from Monday if no deal was reached but backed down in a televised speech on Sunday night, saying that there was a last minute agreement on the measure.
But by late Monday there were still holdouts against the new tax with the session in the House expected to run late.
One of the most prominent holdouts, Luis Raul Torres Cruz, said to support the bill it would need to be clearly linked to tax reform expected to be approved early next year and provide income tax relief to individuals and businesses. He also wants a 60-day review period to find less onerous alternative revenue sources.
“Since the beginning of this process this has been my position on the oil tax,” Torres Cruz said in a statement. If the amendments are not included, Torres Cruz said he “would be obliged to vote against the House bill.”
Garcia Padilla said on Sunday that the oil tax increase would cost a typical Puerto Rican family $1.17 a week, while a planned tax reform expected to be introduced early next year would deliver “savings that will compensate taxpayers by much more with reduced income taxes”.
Mass transit users in San Juan expressed relief Monday morning that the transport was working, a day after an eleventh-hour deal was announced by the governor to halt an expected shutdown, but said a planned crude oil tax hike would hurt.
The local government had been planning to shut its bus and city train service after the governor was unable to convince enough members of his party to support the measure.
“Of course the shutdown would have affected me,” said Miriam Medina, 61, who uses the train to get to work in the Hato Rey financial district. However, she said the solution - an increase in the oil tax - would hit her just as hard.
“They keep increasing taxes on the working class,” she said, citing increased water and electric rates and previous tax increases. “The people can’t take anymore with all of these increases.”
The oil tax increase, to $15.50 per barrel from $9.25, would back a bond sale of up to $2.9 billion, which would repay a $2.2 billion loan to the island’s government development bank from the Highway & Transportation Authority, as well as support mass transit operations. The bond issue has been pushed back from November into early 2015
Reporting by Reuters in Puerto Rico and Edward Krudy in New York; Editing by Megan Davies, Bernard Orr