Treasury Reviews $74M in Further Web Earnings for the Common Fund | Enterprise

Puerto Rico Treasury Secretary Francisco Parés Alicea reported that the General Fund’s net revenue in April 2021 totaled $1,111.6 million ($1.1 billion). This represents an increase of $74 million, as certified in the new Fiscal Plan approved by the Financial Oversight and Management Board (FOMB).

“(FOMB) certified on April 23 a new Fiscal Plan presented on May 27, 2020, which reviews the projection of the current fiscal period and the projections for the next Fiscal Year 2021-2022, which began this July. The Fiscal Plan of May 2020 estimated total income to the General Fund for $9,620.7 million ($9.2 billion), which included about $600 million for postponement measures of the payment of contributions during the effective tax period in Fiscal Year 2020,” the secretary explained.

“The fiscal forecast revised by the fiscal entity is revised to $11,076.5 million ($11 billion), of which $7,717.4 million ($7.7 billion) correspond to the period from July to March and $3,359.1 million ($3.6 billion( to the period of the last quarter, from April to June 2021. This means that the revision for the Fiscal Year 2021 represented an increase of $1,456.5 million ($1.5 billion), or 15.1 percent. The Fiscal Plan establishes that, mainly, said increase responds to the positive effect on the collections of the multiple rounds of federal economic incentive programs, which have contributed to an accelerated economic recovery at the local and federal levels,” he added.

Changes in the Income Tax Projection

When evaluating the changes proposed by the FOMB in the tax areas related to income tax, an increase of 17.8 percent ($340.7 million) is projected for Individuals, and an increase of $325.6 more in the review carried out on Corporations, or 16.9 percent.

On the contrary, with respect to the tax withheld from Non-Residents, the Board reduced the estimated income by $150.5 million, or 26.4 percent. This series has experienced a significant reduction in the past decade.

This non-resident tax line is associated with the income of the export sector and is largely nourished by the withholdings that apply to royalties from foreign companies. Due to several factors, among which are the federal tax reform, the diversification of the supply chain and the expiration of patents, the basis on which these entities are withheld, this tax has been gradually diminished.

Changes in the Projection of Consumption Taxes

“The proposed changes in the Fiscal Plan in the tax lines related to consumption taxes, project an increase of 67 percent in the Motor Vehicle taxes, or an additional $228.4 million over the certified Fiscal Plan in 2020. The behavior of this sector, as we have previously outlined, has consistently exceeded income expectations, which responds to direct transfers and commercial loans and to low interest rates in the market, which in general terms has been the engine of the increase observed in consumption taxes,” Parés stated.

Regarding the Sales & Use Tax (IVU by its Spanish acronym), fund allocations encouraged consumption in particular sectors such as durable goods, construction materials or hardware stores, pharmacies and others. A considerable reduction has been experienced in the entertainment sector and in the accommodation and prepared food services sector. The new Fiscal Plan projected an increase over the current income base of $226.4 million, which represented a 10.5 percent increase.

April 2021

The performance of April revenues is compared based on the new monthly distribution that is considered in the projection of $11,076.5 million ($11 billion). Parés reported that for April, the income amounted to $1,111.6 million ($1.1 billion), which compared to the estimated $1,106.6 million ($1.1 billion), exceed the amount collected by $5.1 million, or 0.5 percent.

The main collection segments reflected a high level of adjustment with respect to the projection for the month. Among the sectors that exceeded the projected are: taxes on individual income, which exceeded the estimate by $18.1 million; excise taxes on shipments, at $17.3 million, and foreign entities, at $10.8 million.

The “Others” category exceeded the month’s projection by $68.6 million. In it, the income of Companies, “Other Taxes” and Non-Taxable income, among others, are reported. Regarding the income of Companies -which due to changes in their legal structure as of the approval of Act 60-2019, significantly increased the payments they make during this fiscal year-, these exceeded the projected amount by $82.9 million, or 20 percent.

Moreover, the “Other Excise Tax” category, in which payments for various excise taxes are entered, did not reach the projection for the month of $68.2 million and $17.5 million entered for this concept, a difference of $50.6 million. Finally, when evaluating the behavior of corporate income, which totaled $100.7 million, the estimate for the month of $203.6 million, represented a deficiency of $102.9 million with respect to what was collected.

Accumulated Period of July to April

During the period accumulated to April, revenues to the General Fund totaled $8,897.6 million (nearly $9 billion), which represented a collection level of $74 million above the estimate for the period.

For the 2019-2020 fiscal period, accumulated revenues as of April totaled $8,035.3 million ($8 billion). The proceeds during fiscal 2020-2021, exceeded this level of income by $862.3 million. This represented an increase of 10.7 percent between one period and another. April of this fiscal year had revenues that exceeded those of that same month of 2020 by $555.3 million, or 99.8 percent. In mid-March of last year, a state of emergency was declared through the Executive Order due to the threat of COVID-19, and April’s revenues were adversely affected.

“When evaluating the performance for this first month with respect to a new projection, we feel confident in meeting the income expectations set by the New Fiscal Plan for this fiscal year and optimistic towards the economic prospects for Fiscal Year 2021-2022.,” the official said.