Puerto Rico STILL a tax haven for polluters
Puerto Rico has more medical sterilization facilities per capita than anywhere else in the U.S., playing a crucial role in ensuring hospitals have sterile equipment. However, these facilities come with serious health risks because many use ethylene oxide, a powerful but carcinogenic chemical, to sterilize medical devices.
In August 2022, the Environmental Protection Agency (EPA) identified 23 U.S. facilities that emit enough ethylene oxide to increase cancer risks in nearby communities—four of Puerto Rico’s seven facilities were on the list. The high concentration of these facilities on the island is linked to tax incentives, a remnant of Puerto Rico’s colonial past, which continues to influence the economy and health of Puerto Ricans.
Puerto Rico’s Department of Economic Development and Commerce (DDEC) grants tax breaks to these companies, even if they pose significant health risks. For instance, Steri-Tech, the most toxic sterilization plant in the U.S. and its territories, exposes residents in Salinas to cancer risks 1,000 times higher than what the EPA considers safe, yet it still benefits from tax incentives. Other companies like Edwards Lifesciences, Medtronic, and Customed also receive tax breaks despite their environmental impact.
The roots of these tax incentives go back to the 1940s when the U.S. pushed Puerto Rico towards industrialization. By 1976, Section 936 of the federal tax code gave U.S. companies a huge tax break for operating in Puerto Rico, attracting pharmaceutical companies in droves. This policy transformed Puerto Rico into a tax haven, but it also came at a cost: dangerous jobs for locals and environmental pollution.
When Congress ended Section 936 in 1996, Puerto Rico created its own tax incentives to keep these companies on the island. The four sterilization facilities flagged by the EPA continue to enjoy these incentives, despite the risks they pose. The DDEC has never revoked a tax break due to environmental concerns, and companies only need to submit financial reports to keep their incentives. Even though the EPA recently imposed stricter rules, none of the island’s sterilization facilities have been shut down.
While the DDEC claims to enforce environmental responsibility, critics argue that the true social and environmental costs are being ignored, allowing the industry to profit at the expense of Puerto Ricans’ health.
