Puerto Rico Economic Pulse ©

June 2003: The Hunt for a New Tax System

Excise taxes vs. a proposed sales tax for Puerto Rico

The story repeats itself: the government’s projections of tax revenues for this fiscal year have not materialized. Recent increases in excise taxes were not enough. The woes of the PR budget seem endless and a question still remains: how can we revamp our battered fiscal system. Although our tax system encompasses several taxes, we will concentrate on maybe its most questionable component, the excise tax system. In this issue we address the flaws of the excise tax and explore a sales tax and a value added tax as options. Find out what are the pros and cons of their implementation in Puerto Rico, fully aware that the last word has not been said yet and further analysis will be needed.