Puerto Rico, already facing multiple battles over billions of dollars in debt, was in yet another courtroom yesterday, the New York Times reported today, locked in a legal dispute with its biggest sales-tax collector and its biggest private employer: Walmart. This time the dispute is not about bond payments, but taxes: the taxes that Puerto Rico is charging Walmart for the goods it brings from its distributors off the island — including in the U.S. — to sell in its stores in Puerto Rico. In May, the island raised the special tax on those goods to 6.5 percent from 2 percent for the largest retailers. Walmart filed suit in December, saying that the increase left it with an effective income tax of 91.5 percent. The tax “sentences Walmart in Puerto Rico to death, for a crime there is no evidence it committed,” Walmart’s lawyer, Neal S. Manne, told the court. Read more.
In related news, Republican presidential candidate Chris Christie said that Barack Obama’s administration has overlooked Puerto Rico’s debt crisis and that he would be willing to assist in return for more oversight over the island, Bloomberg News reported yesterday. Christie, New Jersey’s two-term governor, said that he would support some form of assistance for the territory of 3.5 million people if he were president, but cautioned it wouldn’t come without “tough love.” Obama in October pressed Congress to give Puerto Rico bankruptcy powers not now available to American territories in order to reduce its $70 billion debt load. He also proposed a federal oversight board to help balance its budgets and manage borrowing. The president has called for increasing health care funding for Puerto Rico and extending tax credits to the poor. “I would be willing to help the people of Puerto Rico, but in return I would have to have strict control over their budgets going forward,” Christie said. Read more.
Experts gather in San Juan today to discuss Puerto Rico's economic distress and other important cross-border insolvency topics at ABI's Caribbean Insolvency Symposium. Click here for more information
For more news and analysis of Puerto Rico's debt crisis, be sure to visit ABI's "Puerto Rico in Distress" webpage.
