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Puerto Rico Excluded From Travel America Tax Credit Bill

Proposed legislation to stimulate travel and tourism would be limited to 50 states and exclude offshore territories including Puerto Rico


October 11, 2001
Copyright © 2001 CARIBBEAN BUSINESS. All Rights Reserved.

Under identical bills filed jointly in both houses of the U.S. Congress, Puerto Rico and the U.S. Virgin Islands would be excluded from proposed legislation to grant tax credits for traveling within the U.S., CARIBBEAN BUSINESS has learned..

The measures, HR 3041 in the House and S 1500 in the U.S. Senate, propose tax credits of $500 for an individual and $1,000 per couple for any non-business travel more than 100 miles from home.

The credit would apply "for all travel expenses," including air, land and water transportation, hotels, meals, entertainment, tours, agency fees and even applicable taxes.

"The travel and tourism industry’s health closely connects to the state of the overall national economy," said Sen. Jon Kyl (R-AZ), prime sponsor of the Senate bill. "The aftermath of the Sept. 11 terrorist attacks have devastated the industry more than any other segment of the economy and the situation will worsen until Americans resume travel."

That’s the good news for the industry but there is some very bad news for the offshore jurisdictions including Puerto Rico because the measures would cover travel in the 50 states, not the territories, according to Matthew Latimer, aide to Kyl.

Reaction in the U.S. Virgin Islands (USVI), where upwards of two-thirds of the total economic activity in the territory is tourism-related. "This proposal would be disastrous for USVI for two reasons," said USVI Delegate to Congress Donna Christensen, told CARIBBEAN BUSINESS.

"Not only would the proposal place the USVI at a competitive disadvantage with stateside destinations, but, worse, it would severely threaten our cruise trade because

more than half of our cruise passengers are on vessels originating in Puerto Rico," said Christensen. "This legislation, as presently written, would not apply to either the USVI or Puerto Rico."

Proposal can be amended

Christensen, a Member of Congress since 1997 is also a member of the Congressional Travel & Tourism Caucus. She said she had immediately contacted Rep. Neil Abercrombie (D-HI) who is also a Caucus member. He assured her that he would work to have the territories inserted in the House bill as soon as he returns to Washington after the current Columbus Day recess.

Reached in Puerto Rico during the House recess, Resident Commissioner Anibal Acevedo Vila, said he’s "not convinced Puerto Rico and the USVI are excluded from the proposal. The situation is very fluid. There are several stimulus bills. The President has one, the Democrats have one, and the conservative Republicans have another. I’m on top of this and I’m going to be following it closely and monitoring it."

Acevedo said he "is confident" the final version adopted "will include Puerto Rico and the USVI and I intend to fight for that."

The Senate bill is co-sponsored by Sen. Zell Miller (D-GA). The House bill is co-sponsored by Reps. Abercrombie (D-HI). John B. Shadegg (R-AZ) and Heather Wilson (R-NM).

In background conversations with a number of staffers in both houses, one gets the definite impression that inclusion of the territories would be an uphill campaign with several factors against and only a few in favor.

"It was a conscious decision to restrict the bill to the 50 states and exclude the territories in keeping with who’ we’re trying to assist," said a Senate aide involved in the its drafting. "The fact that they are excluded doesn’t mean that the wording couldn’t be modified in committee or even later in conference."

But another staffer said that "there is a feeling among many members of Congress that we need to confine our preferential spending bills to the U.S. We are looking to have U.S. hotels, motels and other travel-related businesses profit."

The proposals are expected to get prompt attention by the House Ways & Means and the Senate Finance committees. A spokesperson for powerful Ranking Minority Member Charles Rangel (D-NY) of Ways & Means said the Congressman "hadn’t seen the bill yet but would certainly oppose the exclusion of the territories.

Aides to several members of the House and Senate offered some other opinions regarding the subject but only on background. One House staffer said the apparent exclusion of the District of Columbus might work to the advantage of the territories because both the administration and members would want the nation’s capitol included. A Senate staffer said the exclusion of cruises from Puerto Rico from the measure "would be very disruptive to the cruise trade on the eve of what is already building up to be a very bad season."

An aide to a Senator, who has been critical of the anti-Navy stance of some Puerto Rican government officials, was guarded on the subject. "These are times that call for restraint and it would behoove Puerto Rico to soft-peddle the Vieques issue when asking for any changes in pending legislation," he said.

This Caribbean Business article appears courtesy of Casiano Communications.
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