Crime And Corruption

by John Marino

July 16, 2004
Copyright © 2004 THE PUERTO RICO HERALD. All Rights Reserved.

. If there were any recent doubt that crime would be a major issue in this year's election, recent events have wiped it out.

An afternoon slaying at a suburban shopping mall, followed by a spurt of shootings at public housing projects, one of which left three dead and five wounded, have made crime Public Priority No. 1.

The Calderón administration is rushing new cadets out until the streets and canceling overtime pay and vacation for current police officers. That will boost patrols at high-crime areas, as well as in areas heavily traversed by the public like shopping malls and sports and entertainment arenas, by some 1,600 officers.

The move will cost $3 million a month, but the administration says it's an effective way to ensure public safety and peace of mind.

Crime is a particularly tough issue for the Popular Democratic Party, as tough for it as public corruption is for the New Progressive Party.

The rate of annual killings has steadily climbed under the Calderón administration. Worse, even the current police chief reckons that instability in the department -- there have been four superintendents during Calderón's four years as governor -- has harmed its ability to fight crime.

PDP President Aníbal Acevedo Vilá has some smart sounding crime fighting plans in his platform, but he will have to overcome his predecessor's mediocre performance in the area in order to get his message across.

He wants to focus on bringing up crime-solving rates, rather than increasing the overall number of arrests. That is just what Police Superintendent #2 Miguel Pereira thought. It's a good idea, if given the time to work. Calderón did not allow that to happen, opting to boot her second pick to head the island jail system after only a year in office.

The NPP obviously senses this. Former Gov. Pedro Rosselló, taking a third crack this year for La Fortaleza, paid for a televised address this week to discuss the successes of his administration in the law enforcement arena and discuss his plans to attack the current crime wave. The address has been backed up by a media ad campaign highlighting Rosselló discussing his "mano dura" approach to the crime problem.

While the NPP focuses on crime, the PDP is focusing on trying to taint the NPP ticket as lax on corruption. The April Superaqueduct indictments, targeting two former political allies of Rosselló, his campaign manager and secretary general, certainly pumped up such a strategy. So did the investigation into the former governor's pension and statements by federal officials that the Supertubo investigation continues.

But this week anyway, the headlines, by focusing on street crime, are going towards the NPP.

A bad tax cut proposal

Of the many measures being considered in this special legislative session, one of the more interesting is a bill to slash the capital gains tax in half to 5 percent that remains tied up in conference committee.

Little public debate has taken place on the measure, penned by La Fortaleza. Administration officials have mostly discussed it as measure to generate additional tax revenues needed to balance the budget, rather than as an economic development measure, which would normally be a better defense.

Yet this move to slash capital gains may wind up doing nothing more than temporarily increasing tax revenues. For that reason, it's poorly designed and properly should not be passed into law.

For one thing, the bill calls for a one-year window for the tax cut. The reason: Treasury reckons it will garner $65 million in a year. But by granting incentives to undertake transactions this year, it may have the opposite impact when the tax reverts back to 10 percent after the window closes again.

Worse, the law does not require that the profits created by the transaction be reinvested back in Puerto Rico in order to get the reduced rate. That will actually encourage the sales of local property or businesses and the investment of the profits in Florida or New Jersey, for example.

That would actually harm local investment, and local tax revenues, over the course of the next few years -- a time frame the lame duck Calderón administration apparently no longer has in mind.

The Senate, accepting amendments by Senate Minority Leader Kenneth McClintock, extended the bill's tax cut window to two years and established the requirement that capital gains had to be reinvested in Puerto Rico in order to qualify for the reduced rate. But the House declined to sign off on the changes, so a conference committee will decide the bill's fate.

The fact that the capital gains bill only applies to transactions of $250,000 or less has somewhat muted charges, but only somewhat, that the bill was a parting gift by Calderón to the upper classes, especially those thinking of relocating investments or residences stateside. The final version of the bill, and what loopholes it contain, will show how useful it is to wealthy individuals or companies, which are also included in the 50 percent cut.

Finally, economists argue that studies need to be done to gauge the effect of Calderón's first capital gains tax cut, enacted in 2001, before another one is put into effect.

By relying on a one-shot, temporary tax-cut to balance this year's budget, the administration's claim of returning fiscal health to the government is somewhat strained.

John Marino, Managing Editor of The San Juan Star, writes the weekly Puerto Rico Report column for the Puerto Rico Herald. He can be reached directly at: Marino@coqui.net

Self-Determination Legislation | Puerto Rico Herald Home
Newsstand | Puerto Rico | U.S. Government | Archives
Search | Mailing List | Contact Us | Feedback