The no-plastic enterprises that exist throughout Puerto Rico represent some of the biggest problems for the debt-swamped U.S. territory, and some of the biggest opportunities, Bloomberg reported today. From the fruit stands to the bakeries to the barbershops, there’s little love for the tax authorities – and apparently little interest in transactions they can track. Estimates are that about a third of Puerto Rico’s gross national product — as much as $21 billion — is produced off the books. The government loses out on sales and income taxes as millions operate in an underground economy that grew as the official one atrophied. Measuring the phenomenon exactly is almost impossible, though reasons for it are in government data. More than 45 percent of people live below the poverty level. The unemployment rate is over 11 percent. There isn’t an abundance of above-board opportunities for many who stitch livings together with what’s called chiripeando, slang for receiving small under-the-table incomes from multiple sources. In addition, the territory’s 11.5 percent sales tax is the steepest in the U.S., so ducking it with cash-only trades is routine for businesses of all sizes.
For more news and analysis of Puerto Rico's debt crisis, be sure to visit ABI's "Puerto Rico in Distress" webpage.
