Retailers Favors Implementing Sales Tax in PR

[Ecuajey]

Retailers Association favors implementing sales tax

Friday, January 24th, 2003.

By Proviana Colon Diaz of WOW News

United Retailers Association President Ricardo Calero favored Friday the implementation of a sales tax for all services and goods except food and prescription drugs.

The association that represents 18,000 small and medium size businesses believes that a sales tax will benefit all those who are currently affected by the 6.6% excise tax imposed on all imported goods.

Calero said at times, small businesses end up with losses because of the excise tax which is paid prior to reaching the store, so if the merchandise isn’t sold, they end up paying for the product and the tax.

“It will be of complete benefit to small and medium business owners because they will pay the excise tax on making the sale. The current situation has the business owner paying the tax on receiving the merchandise, which is then stocked, representing additional taxes on inventory, plus storage and other expenses that could be invested in obtaining more goods or hiring more staff,” Calero said.

If a sales tax of 4% to 6% is imposed, then Calero suggests that the 6.6% tax be eliminated from imported goods.

Calero made his statements during a Friday morning hearing of the House Treasury Committee, which is investigating the possibility of establishing a new tax model for the Commonwealth.

The legislators present at the hearing asked Calero what guarantee the association could give to ensure that if a sales tax is imposed and the 6.6% tax is eliminated, retailers will actually eliminate it.

Calero could not give any concrete guarantee but said he was confident that small and medium business owners are honest, hard-working people who will most likely honor the elimination of the 6.6% tax.

In addition, the imposition of a sales tax will in some way affect the island’s underground economy that is believed to account for 20% of the money that circulates on the island.

Committee Chairman Francisco Zayas Seijo said by imposing a sales tax on all goods and services, tax evasion is also avoided as currently not all goods pay the 6.6% tax.

“We don’t have the figure because we don’t know what the evasion is, but when you have 500,000 freight cars coming into San Juan, and you only examine 12,000 to 15,000, you know for a fact not all are paying the 6.6%,” Zayas said.