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On Tuesday, Reinaldo Paniagua Látimer, the Executive Director of the Municipal Revenue Collection Center, emphasized the need for economic alternatives to avert a fiscal crisis facing municipalities in January.
Paniagua Látimer acknowledged that while he does not oppose the suggested five-year moratorium on the inventory tax—a crucial revenue stream for municipalities in Puerto Rico—the government needs to pursue solutions to prevent an economic collapse in local towns.
The inventory tax is levied on the value of inventories, including finished goods, partially completed products, and raw materials. The business community has long advocated for its removal due to the increased costs it imposes. Many municipalities are against its abolition as it represents an essential revenue source.
“There are several issues that need immediate attention. [Government officials] will discuss the inventory tax legislation, which will be suspended for five years. I believe it is just that we respond to the commerce sector’s call for caution in fostering economic growth,” stated Paniagua Látimer. “Nevertheless, we must ensure that our primary defense line—our municipalities, which serve the public—do not fall into dire economic situations.”
“It is crucial that during the period in which a committee will be formed to address this issue, we come to a consensus on how this financial shortfall will be managed, as our options are limited; we must explore the alternatives available to us,” he added.
Recently, New Progressive Party (NPP) Representative Carlos “Johnny” Méndez Nuñez announced that in the first half of 2025, his caucus will endorse the initiative put forth by governor-elect Jenniffer González Colón to eliminate the inventory tax.
Over half of the municipalities across the island are grappling with a fiscal crisis, and many are anticipated to become insolvent in the upcoming year.
