Puerto Rico Economic Pulse ©

May 2002: The Challenging Budget Picture

Economic Impact of the Budget – Part II

Revenues are key to a budget. Without them there can be no budget, and how to obtain them particularly in times of economic constraints such as now, presents a challenge. The previous issue analyzed how the Government of Puerto Rico got into a structural imbalance. Combined with the economic slowdown, this situation has generated a shortfall of revenues. Both the Executive and Legislative branches have been proposing new sources of revenues. A key issue in the proposed budget for fiscal 2002-03 is how to obtain $596 million in additional revenues. The bulk of the discussion focused on proposed significant increases in excise taxes on alcoholic beverages, cigarettes, and selected types of autos. Find out how increases on alcoholic beverages will impact the economy and how the government refused a better alternative.