Este informe no está disponible en español.


Hacienda’s new team is up for the challenge

Armed with multiple degrees and loads of experience, the new team puts into action aggressive reform plan


April 14, 2005
Copyright © 2005 CARIBBEAN BUSINESS. All Rights Reserved.

One of the first things Juan Carlos Méndez did when he was designated Secretary of the Treasury (Hacienda) was assemble a team of qualified and capable staff members that would support the department and help him fight the uphill battles he anticipated were not far away. These positions were of extreme importance considering when the secretary is attending any of the 30-something boards he belongs to, half of which he presides, the team in place is in charge of running all operations. Most of the team members came from private practice and hold multiple degrees.

Rolando Rivera Silva, deputy of the Department of the Treasury, is a CPA. Previously, he worked as an auditor at Kevane, Peterson, Soto & Pasarell, as a manager at PricewaterhouseCoopers, and manager of acquisitions and corporate investments at Banco Popular de Puerto Rico.

Deputy Secretary of Internal Revenue Carlos Serrano Terrón is a lawyer and CPA. He worked at the law firm González & Torres PSC and at McConnell Valdés in the areas of industrial tourism exemption and incentives, taxes, administrative auditing, property taxes, and tax litigation.

Tomás Román, the deputy secretary for Legal Matters, has a bachelor’s degree in Business Administration, a juris doctor degree from University of Puerto Rico (UPR) law school, and a master’s in law from Columbia University. He is a CPA and has worked in the finance department of Procter & Gamble and NCR Corp.

Among the team, Edwin Ríos, deputy secretary for Economic Matters, has the most experience working within the Treasury, where he has spent 11 years as an economist in the office of economic and financial matters. Rios has bachelor’s and master’s degrees in economy from UPR. He was also an economics professor at Inter American University and president of the Economists’ Association of Puerto Rico.

Janira Beltrán Sellés, deputy secretary for Administrative Appeals, is a lawyer and a CPA. Beltrán previously worked as a tax lawyer at the firm Pellot and González.

Griselle Labadie Jackson is the secretary’s main technical adviser and is candidly referred to by Méndez, as his right hand. She is a CPA, has a bachelor’s degree, in business administration from UPR, a master’s in taxes from Bentley College, and presently is working on a second master’s in finance at UPR.

Vanessa Franco Fernández is an advisor to the secretary. She is a lawyer and has a master’s in tax law from Georgetown University. For the past four years, she worked as a senior associate in the tax division at Fiddler, González & Rodríguez.

Based on their credentials and experience, Méndez, who himself is a CPA, lawyer, and tax specialist, appointed a team that can meet the fiscal challenges of Puerto Rico.

The challenge

Despite their combined experience and knowledge, the challenge the team faces is far from ordinary. Faced with a budget deficit and increasing government spending, Méndez said the problem couldn’t be ignored any longer. "This is not something we can fix overnight. That is why we are taking these steps. We are in the process of formulating a long-term plan that achieves economy within the government and reduces the government’s size, without affecting the economy. We are at a turning point," he said.

One of the many highlighted problems was the lack of tax revenue coming into the government. An underground economy that some studies have estimated hides one fourth of the economy, makes tax evasion one of the most serious problems confronted by the Department of the Treasury. One of the measures implemented this year was Tax Equity Program, better known by its Spanish acronym PEC, which collects information from various financial institutions and public corporations and allows the Treasury to identify potential tax evaders. The secretary points out, however, this valuable tool doesn’t necessarily fix the problem because it is then up to the department to follow up and investigate suspicious activity.

The budget proposal presented by Gov. Aníbal Acevedo Vilá met tough opposition in the Legislature, a fact Méndez laments may risk the island’s credit even further. "I understand that although the Legislature has an obligation of judging and approving the budget, it is really the governor and the executive branch that should lead in this case because they are the only ones with a complete sense of all the needs that must be attended. What they said about the Legislature creating a different budget, I think they themselves have come to realize that will be impossible because they don’t have the detailed degree of information required," he pointed out.

In the event there is no approved budget by July 1, the first day of fiscal 2006, the outstanding budget is once again in place. "Staying with the present budget would be fatal for the economy," said the secretary, adding this fact could menace the jobs of thousands of public employees. Méndez pointed out the present budget is $1.3 billion unbalanced because it doesn’t count on recurrent revenues to meet the recurrent spending.

Members of the Legislature expressed doubts about the increase in the budget. Méndez went on to explain the increase of $1.38 billion to the general fund, increased from $8.304 billion to $9.684 billion, includes an increment of approximately $346 million that is directly attributed to the percentage estimated of growth of around 5%, according to estimates from the Planning Board. The remaining $1.034 billion were determined in the following form: $95 million in administrative measures that attack tax evasion, $30 million through an extension of the rum refund, $639 million by removing the exclusions from the excise tax, $180 million through the tax on the financial sector, $30 million from an increase of the rights of license of luxury vehicles, and $60 million by making the rate on capital gains a uniform 20% for corporations and individuals.

Méndez emphasized the government needs $9.297 billion to operate, in addition to the $387 million that will be needed to pay off debt, assign funds for increases already legislated or negotiated, and meet the dictations of law that require additional assignment of funds. "The budget presented is balanced, real, but, more importantly, it consists of recurrent income without depending on loans and lines of credit. This was one of the most serious concerns of credit rating agencies Moody’s and Standard & Poor’s," he added.

Another measure that met much opposition was the removal of the exemptions from the 6.6% excise tax. Those against it complained this would automatically mean an increase in prices for consumers. However, the team made reference to a study prepared by the Planning Board showed total consumer prices would be impacted by less than 1%. The team members pointed out that system of tax credits would be established to assist those individuals most affected by the price increments.

"The fact is the decisions we made were tough, but they had to be taken," explained Méndez. It is a good thing Méndez has a tough team in place to back him up. Their joint efforts seem to already be paying off. The secretary pointed out nearly 50,000 more tax statements had come in than at this point last year.

This Caribbean Business article appears courtesy of Casiano Communications.
For further information, please contact:



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