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Economic crisis in Puerto Rico creating unease and doubt

Puerto Rico’s economic crisis threatens to impose new taxes to ameliorate the island’s growing economic problem. The newly elected governor, Alejandro Garcia Padilla, set forth actions in his plan to restore financial stability to the island that seeks to raise the IVU or otherwise known as Impuesto de Venta y Uso by 14% which is the tax all fellow Puerto Ricans have to pay whenever they make a purchase at any business or merchant.

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According to El Nuevo Dia’s Joanisabel Gonzalez, the rapid growth of new taxes will create a gaping financial hole in the public, private and consumer sector that will greatly hurt the wallets and purses of many, if not all, Puerto Ricans living in the U.S. territory. González states “para los fumadores…para los usuarios de celulares… para los conductores…para los que prestan servicios profesionales al Gobierno como sería un abogado, terapista, psicólogo o una agencia de publicidad, por ejemplo implica dejar de recibir al menos unos $11.9 millones al año,” which is creating “ceños fruncidos y murmullos de protesta” from those greatly affected by the governor’s response to the crisis.

On June 28, 2013, The Huffington Post sheds more light on that response when it states that “Puerto Rican legislators…rushed to try to approve a budget amid debate on how best to revive the U.S. territory’s economy, which the New York Federal Reserve president warns has not yet bottomed out.” Though the budget has been approved, Puerto Ricans are still doubtful of their government’s execution on how best to resolve the crippling financial health of the island.

Doubt is filling the minds of many Puerto Ricans due to the length of time that the economic crisis has been impacting Puerto Rico. In 2006, the director of entrepreneurial studies at Berkely Center and also professor of economics at New York University, William J. Baumol, almost prophetically states that “ the real price will be paid when the island will be left with only two choices: drastic retrenchment or massive overpayment for further funds,” which is how Padilla is responding to the current economic crisis by creating several taxes in many delicate areas.

Baumol also states that “the government’s burden can be brought under control with little or no reduction in popular services and, even more emphatically, with no tax increases. This is the expectable promise, and it is a promise that is never kept.”

Padilla responds to the looming doubt of his people by presenting a message on the 1st of July that explains the actions that were taken to help the economy over the first six months of being in office. Keila Lopez Alicea from El Nuevo Dia explains that Padilla spoke to the Puerto Rican people through local channels and states that “el presupuesto es uno fiel a nuestras posibilidades y es justo con todos los sectores, donde cada sector aporta de acuerdo a sus capacidades.” Alicea responds by stating “el presupuesto para el año fiscal que inicio ayer contiene una larga lista de nuevos impuestos … aunque en papel estos impuestos no están diridigos a la clase media, si tendrán un efecto directo sobre toda la cuidadania.”

Puerto Rico’s economy, though assisted by the United States, is creating unease and doubt and is urging the Puerto Rican government and economists to not make the same mistake twice. Puerto Ricans are worried that the financial stability of the island is not sufficient to provide a future for their families and future generations. “La Isla del Encanto” or the island of enchantment, according to many local Puerto Ricans, will eventually lose its “encanto” if economic problems are not resolved in a timely manner.

 by Being Latino Contributor, Kurtvin Perez

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Disclaimer: The views and opinions expressed in this article are solely those of the author and should not be understood to be shared by Being Latino, Inc.

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