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In an unprecedented move, Puerto Rico’s private sector rallies and descends upon the Legislature to oppose a slew of pending anti-business legislation. Here is how you can help.


June 3, 2004
Copyright © 2004 CARIBBEAN BUSINESS. All Rights Reserved.

The power of all

Business associations call upon all businesspeople to stand up and be counted in opposition to legislation that would put an end to the free-enterprise system on the island

It was a rare show of force for one of the most quiet, conservative, low-profile sectors of Puerto Rico’s society. Last week, the Puerto Rico Chamber of Commerce, alongside a dozen affiliated business organizations, issued a stern warning and a rallying cry.

The warning was to the Puerto Rico Legislature not to rush through the approval of more than 20 pending bills that would considerably raise the cost of doing business on the island and wipe out our ability to attract investments, putting into shambles our economy’s ability to compete globally.

The rallying cry was for all businesses and businesspeople in Puerto Rico not to sit around and wait for the worst to happen, but to descend upon the Legislature during the next few weeks and let them know that without a thriving business sector, there are no jobs, no economic development, and no future for Puerto Rico.

(See chart for bill numbers, sponsoring legislators, and committees to which the bills have been referred in either chamber; and accompanying chart for names, phone and fax numbers, and e-mail addresses of relevant Senate and House committee chairpeople and staff, plus key legislators.)

Chamber of Commerce leads the charge

In a packed press conference in Hato Rey, Puerto Rico Chamber of Commerce President Hector Mayol said the proposed legislation would give the government unprecedented and unacceptable power to interfere in the discretion of every business owner to run his or her own business, would greatly increase business costs, and would diminish the island’s competitiveness within a global economy.

He noted that various legislators from the island’s three major parties filed the bills in the two weeks before May 10, the last day for the Legislative Assembly to submit new proposals.

"We [the various associations representing the private sector] have united to warn the people about a series of bills that will affect the island’s business climate and productivity. We understand the interest of the Legislature in protecting certain sectors, but instead of promoting equal treatment and progress, those bills would divert the island from the path other economies of the world are taking," said Mayol.

Accompanying Mayol were representatives from organizations such as the Puerto Rico Hotel & Tourism Association (PRHTA), the Convention Bureau, the Hospitals Association, the Homebuilders Association, the Construction Materials Dealers Association, the State Society of Certified Public Accountants, the Economists Association, the Inter American Society of Businesspeople, and the Consumer Finance Association. Also at the press conference were top executives from companies such as Triple-S, PRT / Verizon, and Delta Airlines, as well as representatives from McConnell Valdes and other top law firms.

Representatives of the Puerto Rico Manufacturers Association (PRMA), who are on record as being squarely behind the chamber in this effort, were en route to their annual convention last weekend.

Mayol listed Senate Bill (SB) 2788 (the new antitrust law) and SB 2771 (to amend the Minimum Wage Law) as two of the most egregious proposals that the 14th Legislative Assembly intends to approve before the end of its term, as these would affect not only specific industries but also every business in Puerto Rico.

The proposed antitrust bill would require prior approval by the justice secretary of any merger, acquisition, or expansion that falls within very broad parameters subject to the determination of government bureaucrats. For example, any merger or acquisition between two companies with a combined market share of 30% or more, or in which the assets of any one of the companies involved exceed $25 million, would require the secretary’s prior approval.

According to the 2004 CARIBBEAN BUSINESS Book of Lists, at least 125 locally owned companies have assets totaling $25 million or more.

In the case of expansions, even small and midsize businesses would be covered. The following would require prior approval: any new commercial establishment of 10,000 square feet or more in a geographic market in which the expanding company already has another commercial establishment; any new commercial establishment larger than the average size of other commercial establishments in the same geographic market; and any new commercial establishment in excess of 90,000 square feet.

Not only the government but also any private person—including, of course, business competitors—would have the right to go to court to seek an injunction to stop any merger, acquisition, or expansion that could have the effect of substantially reducing competition. The door would be wide open for any competitor to obtain an injunction, and then the burden would be on the business that wanted to expand to prove the move wouldn’t tend to create a monopoly.

SB 2771 would strike an even heavier blow to many businesses in Puerto Rico. It would give the government unprecedented power to intervene in the internal affairs of private businesses.

In a nutshell, the bill would give the local secretary of labor the authority to raise workers’ salaries by resurrecting the old industrywide mandatory decrees applicable before Puerto Rico’s adoption in 1995 of the federal minimum wage.

According to Mayol, a good number of those mandatory decrees imposed an unbearable burden on employers, which forced many local and foreign businesses to close and fostered an anti-investment attitude toward Puerto Rico.

Furthermore, the secretary could raise wages above the federal minimum not only on an industrywide basis but also company by company. In other words, if the secretary and his bureaucrats determine a particular company has the ability to pay higher wages without substantially affecting its work force, production, or business, he could order the company to do so. (For a complete analysis of both bills, see CB May 27.)

Upcoming hearings critical

The judiciary committees of the House and the Senate will begin public hearings next week on the antitrust bill. Local businesspeople have opposed the passage of SB 2788, filed by Senate President Antonio Fas Alzamora.

Senate Judiciary Committee Chairman Eudaldo Baez Galib said the committee and the Legislature have a short period to evaluate the measure. "This is a complex and in-depth proposal," he said.

He said the committee would try to complete the legislative process by June 25, the last day for the 14th Legislative Assembly to pass a bill unless the governor calls for an extraordinary session. Baez Galib added that the feedback of local businesses and professional organizations is a must for evaluating the bill. The committee is considering whether to ask business and professional organizations to participate in the hearings scheduled to begin next week or to call on businesses individually.

"Organizations or individual witnesses are free to submit their statements without any restrictions on length, but we will ask them to submit copies of their statements before the day of the hearing [so the committee will] be prepared for cross-examination, which is the most important part of the legislative process. Since we expect a great number of participants, the committee recommends that witnesses provide a summary of their statements in a 10-minute oral presentation," said Baez Galib.

The committee has already asked nearly 10 government agencies, including the Justice Department and the Treasury Department, to make a statement on the proposal.

Baez Galib noted that the committee has its hands full putting the finishing touches on the revised Penal Code, with another 30 related bills, and with the recently submitted legislative bill to convene a referendum on the proposal for a unicameral legislature.

The House will also conduct public hearings on the proposed antitrust bill next week. As of press time, no other hearings had been scheduled and legislative sources had told CARIBBEAN BUSINESS that many of the bills might be considered in executive session—i.e., behind closed doors.

More than 20 other bills also targeted

The concern of the island’s business organizations isn’t limited to those two bills. Mayol and other business leaders ran through a list of 18 other bills that would substantially raise the cost of doing business in Puerto Rico, among them House Bill (HB) 4749, to impose a withholding tax on interest payments on commercial loans by offshore financial institutions; HB 4410, the Consumer Protection Code; and SB 253, to regulate the operating hours of pubs, bars, and other entertainment establishments.

The PRMA has identified a few others, mostly to add more fringe benefits under local labor laws.

"The secretary of the treasury [Juan Flores Galarza] has said some of these proposals, such as HB 4749, are needed to balance the island’s budget. We [the private sector] want the secretary to know the way to balance the budget is by reducing government costs, not by imposing more burdens on the small, midsize, and large companies doing business on the island," said Mayol.

HB 4749 would impose a 10% withholding tax on interest payments on commercial loans by offshore financial institutions. Supporters of the bill, including the local Treasury Department, which would rake in an estimated $25 million a year from the bill, insist it is about leveling the playing field between local and foreign banks. For most others, the legislation would act as a protectionist shield.

"There is concern the island’s competitive capability could be weakened by the 10% withholding tax, since it is understood that not all local projects can be financed solely with local capital," said Alvaro Jaramillo, Citigroup’s country business manager.

PRHTA Executive Vice President Erin Benitez said HB 4749 would adversely affect the development of tourism projects (which are mostly financed from outside the island), would require additional guarantees by the Puerto Rico government if locally financed, and would go against the public policy to strengthen the tourism industry.

She added that as a whole, the bills would certainly increase businesses’ operational costs. "The high operational costs of doing business on the island are a key factor at the time of setting the rates hotels will charge their guests, for example," said Benitez.

"HB 3275 intends to amend an existing law to provide any worker with annual and sick-leave benefits upon working 40 to 115 hours a month. Simultaneously, HB 4376 seeks additional benefits for part-timers. A study of our own has shown these initiatives would add $417,000 to the annual operational costs of a 200-bed hotel," said Benitez, who claimed 50 cents out of every dollar made by the tourism industry goes to pay for locally legislated benefits.

Another bill opposed by local business groups is the proposed Consumer Protection Code. Cirilo Cruz, the chamber’s vice president of technical & legislative services, said the bill is unnecessary because current laws and regulations protect and guarantee consumers’ rights.

"It doesn’t contain anything that isn’t already regulated by existing laws. That is what the administrative legal procedures under agencies such as the Consumer Affairs Department exist for," said PRMA Executive Vice President William Riefkohl. "The proposed bill lightly touches upon many complicated subjects, such as interstate and international commerce and trade."

"The bill also proposes installing consumer service centers in areas where a proportionately higher number of consumer-rights violations occur," added Cruz. "We wonder on what basis...such a determination is to be made."

Other bills that would hinder the island’s economic development are the new Penal Code, which would create new felonies out of actions that harm the environment but whose clauses are vaguely worded, as well as HB 3275, HB 4608, and SB 2771, all of which seek to amend the Minimum Wage Law.

Mayol said conferring vacation and sick-leave benefits to part-timers would affect businesses’ payroll. Further, he said, contrary to arguments by the bill’s sponsors, Labor Department figures demonstrate employers aren’t resorting to part-time hiring as a way to avoid the costly fringe benefits of full-time employees.

In fact, over the past six years, there has been a decrease in the number of part-timers on the island and an increase in the number of full-time jobs (35 work hours or more per week). "The Labor Department said there were 656,000 full-time jobs in 1996 [65% of the total jobs]; in 2003, there were 833,000, representing 73% of the total jobs," said Mayol.

Bill pandemonium

Some 23,000 bills, resolutions, joint resolutions, and others have been presented in the Legislature during the three and a half years of this administration, most of them of little consequence. Congratulatory and condolence expressions and resolutions on budget allocations alone have numbered 4,800. Some say the final bill tally will be double that of any other four-year legislative effort.

Evaluation time has been another major consideration. A number of heavyweight bills have been left until the very end of the legislative session, with lawmakers rushing them through without adequate analysis and at the risk of passing them at midnight of the session’s last day—when the public isn’t watching.

"You can expect this flurry at the end of the session, particularly during an election year," said Riefkohl.

"Take the upcoming Environmental Code legislation, which has 11 volumes and close to 600 pages," said Manuel Reyes, the PRMA’s director of legal affairs. "How analytical can it be to study this document in the final 30 days of the current legislative session?"

"It isn’t healthy to rush the bills or make them too complicated," said Kenneth Rivera, chairman of the legislative committee of the State Society of Certified Public Accountants. "Legislators should aim for simple, high-quality laws."

The PRHTA’s Benitez also recommends against sweeping legislation. "The answer is simpler when you target legislation to the problem areas," she said. "This could yield higher efficiency, particularly if combined with a study on the subject matter. It would clearly help to streamline processes, avoid duplication, and increase coordination."

"The bill flow dramatizes the incoherence of the whole process," said Mayol. "Despite the high number of new bills, we are still following up on past and extremely relevant legislation such as the proposal to lower the workweek from 40 hours to 35. The flextime legislation is another key piece that has been lingering for the past few years."

"It is incredible that the tourism industry, which is based on service, isn’t allowed a more flexible situation because we don’t have flextime legislation in place," said Benitez. "Once workers go over an eight-hour shift in any one day, they go on overtime, making for a weekly scheduling nightmare. We need to compress the week into 40 hours any which way. Why not here, when the unions in the States are for it?"

CARIBBEAN BUSINESS Staff Reporter Luis A. Ramos contributed to this story.


Pending Antibusiness Legislation

Bill: Author(s) / Committee(s) / Issues

HB 4821: Vizcarrondo Irizarry / Judiciary / Creates the Antitrust Law of the Commonwealth of Puerto Rico of 2004 in lieu of current law.

SB 2788: Fas Alzamora & Baez Galib / Judiciary; Banking & Consumer Affairs; Infrastructure, Technological Development & Commerce / Creates the new Antitrust Law in lieu of existing legislation. Sets penalties for violators.

Basis for opposition

  • The provisions of these bills are in open conflict with the legislation’s stated purpose of fostering a competitive and open market in Puerto Rico. Further, the bills would set Puerto Rico apart from other jurisdictions in that it would discourage external and internal capital investment here.
  • These bills are based on the incorrect assumption that existing laws and regulations aren’t sufficient to prevent excessive concentration of economic power (antitrust).
  • These bills would require prior approval by the secretary of justice of any merger, acquisition, or expansion that falls within very broad parameters that include small and midsize businesses and are subject to the determination of government bureaucrats. Applications for approval would require the submission of sensitive business information such as sales and production data and long-term expansion plans.
  • These bills would set up a Special Antitrust Board composed primarily of private citizens—a sort of Blue Ribbon of Competition—to assist the Department of Justice’s Office of Monopoly Affairs (OMA). Both the board and the OMA would have the power to investigate and request additional confidential information from businesses.
  • Most states don’t regulate mergers and acquisitions at the state level. Rather, they rely on the application of federal antitrust law, which provides for a uniform application of the same rule across the national economy. Further, there is no precedent in the States for application of antitrust laws to curtail the internal growth of businesses through expansions. Puerto Rico would be set apart from other jurisdictions with which we compete for investments.

HB 4608: Colberg Toro Labor & Veterans Affairs / Amends the Minimum Wage, Vacations & Sick Leave Law. Stipulates Labor & Human Resources Department secretary has the faculty to revise, repeal, or create mandatory decrees every three years.

SB 2771: Fas Alzamora, Rodriguez Gomez, Dalmau Santiago & Martin Garcia / Labor, Veterans Affairs & Human Resources; Judiciary / Amends the Minimum Wage, Vacations & Sick Leave Law. Grants the Labor & Human Resources Department secretary the faculty to increase salaries and revise mandatory decrees every three years, as well as to eliminate or create new decrees.

Basis for opposition

  • Prior to 1998, Puerto Rico had a Minimum Wage Board. It had the faculty to establish mandatory decrees for the various industries and entrepreneurial sectors and to dictate labor regulations applicable to each one.
  • The experience with the board was such that, in the majority of cases, it created contradictory mandatory decrees, which provoked uncertainty in the private sector since the rules of the game could be altered at any moment. Additionally, the majority of the decrees ended up being financially burdensome for employers, provoking the closing of businesses and discouraging the establishment of foreign companies in Puerto Rico.
  • Currently, the Minimum Wage Law stipulates that the dispositions of the Fair Labor Standards Act are applicable to Puerto Rico. These bills intend to provide the labor secretary with the power that once belonged to the extinct Minimum Wage Board to establish mandatory decrees.
  • These bills would give the labor secretary not only wide discretion in establishing mandatory decrees by industry, but also the discretion to exempt specific businesses within each industry from complying. The bills also would eliminate the ability that the courts could have to revise the secretary’s determinations, making those determinations final.

HB 3275: Chico Vega, Vizcarrondo Irizarry, Colberg Toro & Vega Borges / Labor, Veterans Affairs & Human Resources; Infrastructure, Technological Development & Commerce (Senate) / Amends the Minimum Wage, Vacations & Sick Leave Law. Establishes the number of sick leave and vacation days to be earned by workers who work fewer than 115 hours per month.

Basis for opposition

  • Proponents of the bill argue part-time employment is on the rise because employers are seeking to save on fringe benefits that accrue to full-time employees by law. Data from the Labor Department demonstrates there is no such problem in Puerto Rico.
  • 53.6% of employers say the primary reason for part-time as opposed to full-time hiring is the employee’s convenience. 58.5% of employees say the reason they seek a part-time job is their own convenience.
  • The measure seeks to increase the number of full-time posts at the expense of part-time posts. This would increase the unemployment rate. The bill would inevitably result in higher labor costs for businesses. Higher operational costs for businesses would result in higher prices to consumers.

HB 3377 (substitute to): House Committee on Labor & Veterans Affairs / Labor, Veterans Affairs & Human Resources (Senate) / Amends the Unjust Dismissal Law. Provides that any employee hired for an unspecified period of time who is dismissed without just cause would have the right to receive from the employer, in addition to the wages he / she would have earned, indemnity equivalent to one month’s pay if the dismissal takes place within five years of service, two months’ pay if within 15 years of service, three months’ pay if after 15 years, or an indemnity equivalent to one week’s pay for each year of service, whichever is higher.

Basis for opposition

  • In cases where there is a collective bargaining agreement, it purports to give an arbiter the power to order restitution (i.e., that the employee be rehired) when the dismissal was without just cause.
  • Current law already provides for economic sanctions against employers who dismiss an employee without just cause. But the courts have already decided there is no such thing as the right of restitution because it would force an employer to keep an employee who isn’t wanted or isn’t trusted.
  • If the parties to a collective bargaining agreement have already agreed to restitution as a possible remedy, that agreement would apply, so there is no need to enact that remedy into law. This law would mandate a result that is the job of labor unions to negotiate and obtain.

SB 2635: Rodriguez Gomez, Fas Alzamora, Dalmau Santiago & Martin Garcia / Health & Environmental Affairs; Labor, Veterans Affairs & Human Resources / Sets forth minimum working conditions for nurses in all public and private health facilities; provides for a minimum wage for nurses based on academic achievement, experience, and performance on the basis of a full-time workweek of 37.5 hours.

Basis for opposition

  • The current Minimum Wage Law was enacted precisely to avoid having different classifications and wage scales applicable to different industries or sectors, and thus to avoid giving preferential treatment to one group over another, which is exactly what this bill would do.
  • The proposed wage increase would be 65% over the average salary paid today of $23,806 annually. The bill would represent an increase of $115 million in labor costs alone. Many hospitals and healthcare facilities wouldn’t be able to absorb the additional costs, which would result in significant layoffs of nurses and other professionals.

HB 4354: Vizcarrondo Irizarry Labor & Veterans Affairs / Amends the Minimum Wage, Vacations & Sick Leave Law. Gives employees up to seven years to file a lawsuit for unpaid wages against an employer.

HB 4376: Colberg Toro S. / Labor & Veterans Affairs / Amends the Minimum Wage, Vacations & Sick Leave Law. Provides that no employer may keep an employee as a part-time worker for more than one year.

HB 4355: Vizcarrondo Irizarry / Labor & Veterans Affairs / Amends the Unjust Dismissal Law. Establishes employees and workers’ right to know about their entitlement to an indemnity in case of dismissals without cause (mesada). Establishes an extra-judicial mechanism for collecting the indemnity.

Basis for opposition

  • All these bills just add more costly fringe benefits that will continue to erode Puerto Rico’s competitiveness in the global economy, particularly in terms of labor costs.
  • As it is, local workers already have more fringe benefits under local labor laws than workers in any U.S. jurisdiction.

HB 4570: Colon Ruiz / Labor & Veterans Affairs /Amends the Christmas Bonus Law. Provides that state, municipal, and public corporation government employees will be entitled to their full Christmas bonus regardless of the number of days they may have been off work due to temporary sick leave.

SB 2113: Martin Garcia / Labor, Veterans Affairs & Human Resources (April ‘03) / Amends the Working Mothers Law. Extends maternity leave to a total of 12 weeks, thus: from 1 to 4 for prenatal rest and from 9 to up to 11 weeks after birth.

HB 4233: Vizcarrondo Irizarry / Women’s Affairs (Nov. ’03) (Senate) / Amends the Working Mothers Law. In case of dismissal of an expectant mother, provides that the employer may raise lack of knowledge of her condition as an affirmative defense, but the burden of proof in order to establish that defense rests on the employer while all the employee needs to do is present either direct or circumstantial evidence that the employer knew, should have known, or could have known of her condition.

Basis for opposition

  • All these bills just add more costly fringe benefits that will continue to erode Puerto Rico’s competitiveness in the global economy, particularly in terms of labor costs.
  • As it is, local workers already have more fringe benefits under local labor laws than workers in any U.S. jurisdiction.

HB 4749: Administration (Popular Democratic Party) / Treasury / Amends the Internal Revenue Code. Equals the tax treatment of financial institutions dedicated to industry or business in Puerto Rico and foreign financial institutions not dedicated to industry or business in Puerto Rico, in terms of tax payments on interest received from commercial loans.

Basis for opposition

  • The proposed tax burden existed prior to the 1994 Tax Reform. Such tax burden was eliminated at the time as a way to facilitate the flow of funds for the financing of local investments, in light of the immediate elimination of the dispositions relating to Section 936.
  • The proposed scaled tax burden for foreign financial institutions would be imposed on the gross income from interest earned. This isn’t in tune with the reality of local financial institutions, which pay taxes on the net income.
  • The proposed tax burden is retroactive in nature. Foreign financial institutions that issued commercial loans to residents in Puerto Rico issued such loans under the current legal regulations, meaning the interest these would receive would be exempt from taxes in Puerto Rico. Such action would tarnish the good name and standing of Puerto Rico in the foreign financial markets, which would negatively affect our capability to secure funds outside of Puerto Rico.
  • The majority of the existing loan contracts issued by nonresident institutions contain clauses that require that it must be the debtor who pays the additional taxes as proposed by the bill, thereby eliminating the risk or impact that such taxes have on the payments to be received by the foreign institution. This is known in the financial markets as the Gross Up clause. The purpose of this clause is to precisely pass to the local business the total economic impact of such type of tax, and the local business would obviously pass such additional costs to its clients. This means the ones who would end up paying the proposed tax would be the businesses operating in Puerto Rico. This is detrimental to businesses, to our economy, and to the local consumer.
  • Additionally, this bill would create an additional tax barrier for Puerto Rico, placing the island at a disadvantage in relation to other countries with which we will inevitably compete in a globalized economy.

HB 4410: Tripartite delegation / Consumer Affairs / Creates the Consumer Protection Code. Sets forth rules regarding the protection and defense of consumers; regulates contracts between consumers and businesses.

Basis for opposition

  • The bill is unnecessary because there already are plenty of laws and regulations that set forth and guarantee consumer rights. In fact, many of the provisions in the proposed code conflict with existing laws and regulations.
  • Would allow third parties such as associations to make claims or initiate actions on behalf of the presumably affected consumer or consumers. This goes against basic principles that require that it be the affected person who makes a claim.
  • Would allow consumers to backtrack on an already completed sale made outside a commercial establishment, such as at home or by phone. Within three days of the sale, the buyer could use the product and return it for a full refund. The seller would have to take the product back even though it couldn’t be sold as new.
  • Would practically eliminate the application in Puerto Rico of "hold harmless agreements." These clauses are vital in commerce, and their use and practice is precisely provided for in law and jurisprudence. The elimination of hold harmless agreements would create uncertainty and make impossible many commercial transactions that take place today in Puerto Rico.
  • The code would violate the legal due-process rights of commerce owners insofar as it would switch the burden of proof from the consumer (claimant) to the business owner (defendant) in all disputes arising from its provisions. In other words, the business owner would be the one who would have to prove the product wasn’t faulty, didn’t serve its intended purpose, didn’t perform as advertised, etc., not the other way around. This aspect of the proposed code would increase the number of frivolous suits against businesses as claimants would have nothing to lose if they don’t win.

HB 4162: Perez Roman, Vega Borges & Garcia San Inocencio / Consumer Affairs / Enacts the Direct Consumer Protection Law. Orders the Department of Consumer Affairs to establish a pilot program to install consumer service centers in shopping malls where consumers can file administrative complaints against retailers and receive orientation on their rights.

Basis for opposition

  • There are already laws and regulations that provide rights and guarantees to consumers. The Consumer Affairs Department secretary already has the power to provide what is sought in the bill.
  • The bill mandates that the consumer service centers be in "areas where there is a proportionately higher number of consumer violations." There are, however, no empirical data to support that legislative mandate, which would make its application highly arbitrary.
  • The bill obviates the costs of implementing its own mandates, as it provides no additional budget for the Consumer Affairs Department to establish the consumer service centers.

HB 4365: Gonzalez Colon Consumer Affairs; Commerce & Industry / Amends the Consumer Affairs Department Law. Requires all commercial establishments to provide receipts for goods and / or services sold and to explain to customers the policy for exchanges and refunds.

Basis for opposition

  • There are laws and regulations already in place to guarantee the rights of consumers.
  • The bill is worrisome because it fosters a climate of distrust toward the commerce sector, which already faces a broad range of regulations that make operations difficult and increase the cost of doing business in Puerto Rico. Demonstrates ignorance about the high level of responsibility with which most business owners in Puerto Rico operate their businesses.

SB 1497: Ortiz Daliot / Consumer Affairs / Requires from any person or business engaged in the manufacture or importation of pharmaceutical or health care products or products intended for human consumption to label such products for distribution in Puerto Rico either in Spanish only or in English and Spanish.

Basis for opposition

  • Adds more costs to the manufacturing, wholesale and retail industries.

HB 4293: Mundo Rios / Commerce & Industry; Treasury / Amends the Internal Revenue Code. It provides that no alcoholic beverages may be sold at any retail establishment between 1:00 a.m. and 7:00 a.m.

HB 4294: Varela Fernandez / Government / Orders all bars, pubs, and discos to close no later than 2:00 a.m.

SB 2537: Ramirez de Ferrer / Government & Public Safety; Banking & Consumer Affairs; Labor, Veterans Affairs & Human Resources / Amends the Law to Regulate the Operating Hours of Commercial Establishments. Regulates the operating hours of discos, bars, pubs, nightclubs, dance halls, and entertainment centers.

SB 2737: Prats Palerm / Treasury; Government and Public Safety / Amends the Internal Revenue Code to require business owners interested in obtaining or renewing a liquor license to present evidence that certifies that their employees have taken a specialized course on responsible vending of liquor or alcoholic beverages.

Basis for opposition

  • Police statistics on murders in January 2004 show the majority of these crimes in San Juan, Carolina, and Bayamon took place between 4:00 p.m. and 12:00 midnight. Furthermore, of the 781 murders recorded in 2003, only 3.7% took place at or near discos or pubs. Murders inside a commercial establishment were less than 1%.
  • There is no rational link between the proposed legislation and the murder problem it purports to tackle.
  • These bills will have an adverse impact on the local economy insofar as it would affect the tourism industry and the economic activity generated by night entertainment establishments. The bills would also adversely affect state and municipal governments’ revenue and create higher unemployment as a direct consequence of cutting back on the hours of operation of these establishments.
  • Furthermore, to force the early shutdown of establishments that currently operate legitimately and in accordance with applicable laws and regulations would probably force the transfer of these entertainment activities to places more difficult to supervise and regulate, such as beaches, farms, homes, private halls or, worse yet, to other private places where the use of controlled substances is encouraged or to businesses operated by shady characters or criminal types.

SB 2912: Administration (Popular Democratic Party) / N/A / Amends the tax law to impose on casino and gaming businesses the obligation to withhold a 10% tax on the prizes paid to individuals, residents or not, as a result of playing slot machines or similar games.

Basis for opposition

  • Slot machines are operated by the Tourism Co. and not hotels, as could be understood in this bill. This means hotels can’t be made to withhold money because they don’t control such funds. The state can’t delegate to a third party the costs of levying taxes.
  • Also, this could negatively affect casino’s gaming volumes. Players would only be able to keep 90% of their prizes. There isn’t a single jurisdiction in the world where money is withheld from tourists for winning at a casino. This is no way to promote tourism.

SB 2302: Fas Alzamora & Baez Galib / N/A / Adopts a new Penal Code.

Basis for opposition

  • There is no maximum limit on fines and other penalties applicable to both natural and juridical (i.e., businesses) persons, leaving it up to the discretion of the court and creating the possibility that the sanctions might not be proportional to the conduct they purport to penalize.
  • Article 179 would create a new crime of "illegal recording of images"; would place the burden on businesses to prove beyond a reasonable doubt that surveillance systems such as cameras in a store have been installed for a "legitimate investigative purpose."
  • Article 191 would prohibit any person from selling, transferring, or renting real estate or other property based upon considerations of politics, religion, race, sex, social condition, or national origin. Although those are fundamental rights, they are designed to be claimed with respect to governments, not other private people. Private people should have the liberty to enter into contractual relations with whomever they see fit.
  • Article 240 would create new crimes for damage to the environment. The provisions are, however, excessively broad and vague. Article 242 would create new crimes for environmental contamination. Like Article 240, the provisions here are excessively broad and vague.

HB 4730: Ruiz Nieves & Vizcarrondo Irizarry / Natural Resources & Environmental Quality / Creates the Environmental Protection Code for the Commonwealth of Puerto Rico. Establishes the rules for the protection, conservation, defense, improvement, and restoration of the environment.

Basis for opposition

  • This bill has been announced publicly since the start of this administration. However, it wasn’t until the last day to file legislative measures that the bill was presented. The bill is more than 600 pages long, but has never been submitted to the business sector for review and analysis.
  • To demand that parties affected by this bill submit their commentaries in barely a month’s time, when the Legislative Assembly has taken more than three years to produce it, is one more proof of the assembly’s lack of consideration for the impact this bill would have.

SB 2720: Dalmau Santiago & Rodriguez Gomez / Health & Environmental Affairs / Creates the Commonwealth of Puerto Rico’s Universal Health Care Plan. Creates the Central Administration for the Universal Health Plan and the Commonwealth of Puerto Rico’s Health Facilities Corp. Defines their powers, functions, and purpose.

Basis for opposition

  • The state has the obligation to make sure citizens’ needs are satisfied only when they can’t satisfy such needs themselves through free enterprise. Otherwise, the state would become a competitor with powers so far-reaching that it could leave a large number of people unemployed.
  • Every government administration claims to be in favor of reducing the size of the governmental apparatus to minimize government intervention in economic activity, liberalizing and simplifying existing rules, and repealing anachronistic laws. This measure would do exactly the opposite.

SB 2817: Prats Palerm / Infrastructure, Technological Development & Commerce; Treasury / Amends the Business & Businesspeople Obligatory Registration Law. Modifies the law to make it match the new Commerce & Export Co.; eliminates the registration fee; makes it obligatory for small and midsize businesses to register; allows the secretary of Commerce & Economic Development to impose fees for certain services and information; sets July 15 as the deadline for businesspeople to provide the information required by the registry.

Basis for opposition

  • As originally conceived, businesses could register voluntarily. The law was amended and the Business & Businesspeople Obligatory Registration Law was established, making it applicable to every natural or legal person operating Puerto Rico businesses of more than $50,000 a year. Now they want to extend the law to every type of business or commerce.
  • Currently, more than nine trustworthy resources exist in which information on the different types of businesses that operate locally can be obtained. Instead of creating additional mechanisms through legislative action for the compilation of data on the private business sector, imposing expensive additional fees on small businesses, a coordinated instrument that eases access to information already available should be established by executive order.

This Caribbean Business article appears courtesy of Casiano Communications.
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