A 20% contraction in the General Fund's income if Act 154 is eliminated

Revenues obtained by Act 154 conform 21% of the Net General Fund, if removed, the general fund’s income will be plummeted by 21%. Just this month, the treasury department released the general fund income for the month of July and revenues under Act 154 conformed 34% of the net General Fund Income and was the largest contributor in the rise of income compared to the same month in 2017. Yesterday, August 28, 2018 the Treasury Department which includes the IRS told the Puerto Rico Treasury Department that at the moment they do not intend to eliminate credit to foreign businesses based on the island, but the incentive is not permanent, and it is expected to end in 2019.

Also, Thump’s new tariffs in trade may add to the negative effects this may have because some corporations established in the island benefit from these incentives and without them a lot of foreign corporations will reevaluate their stay in the island. Both factors add another rock on our road to economic stability. The costs of doing business in Puerto Rico will get higher and this sends the wrong message to investors interested in the island and deepens budget issues.

Source: Departamento de Hacienda

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