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Senators denounce special tax on the financial sector


May 6, 2005
Copyright © 2005 CARIBBEAN BUSINESS. All Rights Reserved.

"Financial assassination of the economy," that is how Sens. Carmelo J. Ríos Santiago and Roberto Arango Vinent of the New Progressive Party described Gov. Aníbal Acevedo Vilá’s proposed special $360 million, two-year tax on Puerto Rico’s financial sector. Sens. Ríos and Arango, chairs of the Municipal Affairs & Financial Institutions and Commerce, Tourism, Urban Development & Infrastructure committees, respectively, pointed out during a press conference last Sunday they will oppose any measure that could negatively affect the island’s financial sector.

The senators made public a hand-delivered letter they were to send May 2 to Treasury Secretary Juan Carlos Méndez. They requested information on the economic analysis performed by Hacienda for which the special tax proposal was based, on how they arrived at the $360 million figure, and its potential impact on construction, commercial, personal, auto, and durable-goods loans. They also requested an analysis on the consequences of the proposal on Puerto Rico’s banking industry, its competitiveness, its ability to attract new capital, and its stock value. They further requested from the Treasury secretary an analysis of the ramifications to the local economy of the tumbling of Puerto Rico banks’ stock prices.

As of market closing April 28, the market value of the eight publicly traded Puerto Rican bank stocks lost $8.95 billion or 42% of their market capitalization since Acevedo Vilá took office Jan. 2, the senators pointed out. Puerto Rico bank stocks had a market capitalization of $18.71 billion before the market opened March 15, the day before the governor’s proposal was released; they had lost $2.74 billion or 12.7% of market value since the beginning of the year.

This Caribbean Business article appears courtesy of Casiano Communications.
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