1. law, govt and politics
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February 27-March 1, 2015
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The San Juan Daily Star
GOOD MORNING
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February 27-March 1, 2015
The San Juan Daily Star has exclusive New York Times News Service in English in Puerto Rico
Anti-IVA Mobilization Gets
Underway This Weekend
By MARIA MIRANDA SIERRA
[email protected]
A
INDEX
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n array of protests, activities and assemblies have been confirmed to take place
this weekend and well into next week
against the implementation of the value-added
tax (IVA by its Spanish acronym).
The various groups that have one thing in
common: they are all against the 16 percent IVA
proposed by the administration of Gov. Alejandro García Padilla.
From different unions, parents and students
to teachers, citizens in general and New Progressive Party (NPP) grassroots supporters and even
Popular Democratic Party (PDP) faithful, these
groups have the same goal: to do everything possible so that the IVA will not be implemented.
Others have suggested that if the IVA is realized, it should be kept at a 7 percent rate just like
the current sales and use tax (IVU by its Spanish
acronym).
Teachers union Educamos, the Electrical
and Irrigation Workers Union (UTIER by its Spanish acronym) and the UTIER Solidarity Pro-
gram (Pro-Sol UTIER) will be participating in an
assembly called by the movement “We Are All
the People,” or “Todos Somos Pueblo,” slated for
Saturday at 1 p.m. at the Inter American University School of Law Amphitheater in the Hato Rey
sector of San Juan.
The movement, led by Rev. Pedro Rafael Ortiz, also comprises the Faros Alliance, Proyecto
Pesca, Navarro Community in Gurabo, the Puerto
Rico Energy Alliance, the First Baptist Church of
Caguas, the Archdiocese Social Action Council,
National Education Educators and Workers Union
(UNETE by its Spanish acronym) and State Insurance Fund (SIF) union workers, among others.
According to union leaders Eva Ayala (Educamos) and Luis Pedraza Leduc (Pro-Sol UTIER,)
the idea of holding the assembly is to look for
other options to propose a “real” integral tax reform aimed at addressing the people’s needs and
to determine the next steps to take to demonstrate their rejection of the IVA.
“We also recognize that there is an existing
need to restructure the public debt,” Pedraza Leduc told the STAR.
Continues on page 4
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From page 3
Meanwhile, the STAR learned
that Sacred Heart Catholic Elementary School in San Juan Principal
Sister Mary Andreen sent parents
an email stating that on March 5 a
rally will be held at the Capitol building to protest the proposed tax on
private education.
“If at all possible, we would
ask you to please get to the Capitol
and show your dissatisfaction with
this imposition on the families of
our schools,” Andreen said. “Most
families will meet there from 9 a.m.
to 11 a.m. The Catholic Schools will
meet on the north side of the Capitol building at 9 a.m.”
Andreen said the protest should
last approximately until 11:30 a.m.
“Parents, high school and college students will be present at the
rally. We, as an elementary school,
will have classes. We will also
pray that this [legislation] does not
The San Juan Daily Star
February 27-March 1, 2015
pass,” she added. “Please try to be
present at the rally. You know there
is strength in numbers. Show your
support for Catholic education.”
Meanwhile, this past Wednesday, a number of members of the
Union Coalition met to determine
the steps to take since the tax reform
was filed at the Capitol and public
hearings began last week. The Coalition is composed of the Puerto
Rican Central Workers Union (CPT
by its Spanish acronym), the Puerto
Rico Teachers Federation (FTPR by
its Spanish acronym) and the Central Workers Federation (FCT by its
Spanish acronym).
After the meeting concluded,
Public Buildings Authority Workers
union leader Federico Montalvo,
who served on the tax reform advisory committee, said the coalition
decided to hold a second meeting
slated for Tuesday, March 3, where
most unions will be participating.
On March 5, the coalition will
be giving depositions at the public
hearings on tax reform at the Capitol.
As for the NPP faithful who
will also be protesting the IVA at
the Capitol, NPP gubernatorial candidate hopeful Ricardo Rosselló
called for a united front to demonstrate against the proposed IVA on
Sunday at 11 a.m. in front of the Capitol building. His protest is called
“Halt the IVA.”
“My call to the governor was to
bring together all sectors and allow
them the necessary time to achieve
a transparent and thorough discussion. I then presented six possible
alternatives for addressing the problem,” Rosselló said. “Other leaders
and sectors have presented other
proposals; however, the reaction [of
the governor] has been one of attack
and lack of seriousness, declaring
that all those who oppose the most
dramatic tax hike in the history of
Puerto Rico are ‘tax evaders.’”
He said that in the face of this
reality there is no other alternative
but for the people to organize and
express their indignation.
Looking to Sell Tax Reform, Governor
Meets with Metro-Area PDP Leaders
By MARIA MIRANDA SIERRA
[email protected]
G
ov. Alejandro García Padilla
summoned Popular Democratic Party (PDP) leaders from
the San Juan metro area to a meeting
late Thursday afternoon to apparently
try to sell them on his proposed tax reform and the implementation of the 16
percent value-added tax.
The meeting at party headquarters in the capital city’s Puerta de
Tierra sector was to take place as San
Juan Mayor Carmen Yulín Cruz has
openly stated that she opposes the
value-added tax (IVA by its Spanish
acronym), and after she has already
participated in protests against its
implementation and has said she will
continue engaging in similar demonstrations.
Senate President Eduardo Bhatia
has also hinted he will not vote in favor of the tax reform if certain areas
aren’t addressed in the legislation. The
at-large senator also suggested that the
government renegotiate its debt and
dramatically reduce operational costs.
PDP Secretary General Jorge Suárez reportedly said the governor invited leaders and committee chairs from
San Juan, Trujillo Alto and Cataño.
Cruz’s press official, Carmen Serrano, said the San Juan mayor was
not invited to the meeting.
Mayors Association President
Rolando Ortiz said he hadn’t been notified about the gathering either, but
that if he has to go he will be there.
Ortiz tried to distance himself
from the public dispute within the
PDP between IVA supporters and
opponents.
“It’s a stage in the deliberation
process between the parties and in the
end they will reach a consensus,” Ortiz said.
The governor has been holding
meetings across the island on the tax
reform and the changes that the new
system will bring.
The San Juan Daily Star
February 27-March 1, 2015
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Implementation of Gender-Equality Curriculum Officially Begins
By EVA LLORENS VELEZ
[email protected]
E
ducation Secretary Rafael Román on Thursday released the circular letter that officially
began the implementation of a gender-equality curriculum in public schools, a move that has
been criticized by religious groups in recent weeks.
Supporters of the initiative contend that
young children are aware that color, language,
gender, and physical ability are connected to privilege and power. Racism and sexism have a profound influence on children’s developing sense of
self and others, experts say.
Many groups are promoting a gender-equality curriculum to help young children develop
anti-bias attitudes, learn to think critically, and
speak up when they believe something is unfair.
Supporters contend that a gender-equality curriculum will help reduce the rampant violence toward
women.
Religious groups contend, on the other hand,
that the curriculum will promote homosexuality
as an acceptable practice and teach young children
that sex before marriage is acceptable, thus promoting promiscuity.
“The Government of Puerto Rico, in exercising
its social responsibility to promote human rights,
argues for the [quest] as a fundamental principle
of equity among human beings,” reads circular
letter in its preamble. “The Department of Education of Puerto Rico is essential in that effort. The
public education system, a fundamental entity of
Puerto Rican society, can not be oblivious to social
inequalities and corresponds to foster a culture of
peace, justice and fairness.”
The goal of the new public policy is to strengthen and institutionalize gender equity in all academic disciplines, levels, initiatives and projects of
the Department of Education. To achieve this, the
agency said it is committed to transforming and
implementing the content and curriculum practices, providing services and disseminating information that promotes gender equity.
The circular letter states that the objective is to
eliminate gender disparity and promote progress
toward achieving equity.
“With the implementation of this public policy, we move a step forward to address a fundamental issue that the whole country must agree
on: social inequalities are detrimental to community life,” Román said. “Today we reaffirm our
commitment to educating students in the public
system and Puerto Rico that all human beings deserve the same respect and dignified treatment.”
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The San Juan Daily Star
February 27-March 1, 2015
Some Businesses Said Illegally Charging IVA
By MARIA MIRANDA SIERRA
[email protected]
S
ome businesses in a number of island towns have allegedly already
started charging consumers the
value-added tax even though it has yet
to be implemented, let alone be passed
into law, several consumers have warned the Treasury Department.
Early Thursday, Popular Democratic Party Rep. Carlos Bianchi filed legislation to investigate those businesses
that have been reported by consumers
for being charged for the value-added
tax (IVA by its Spanish acronym).
House Bill 1206 orders the Consumer Affairs Commission to conduct an
exhaustive investigation into the alleged recent practice by businesses of including the IVA in their sales.
“Recently, and while the legislative
assembly is in the process of evaluating
the new tax system that will allow for
dramatic reductions in tax evasion and
will make the tax load more equitable
… reports have come to light that uns-
crupulous businesses have started to
charge the IVA for their services,” reads
the bill.
“We can not allow that, while we
engage in the appropriate legislative
procedure for this far-reaching legislation … insensitive people exist who take
advantage of the circumstances for their
own illegal personal economic benefit,”
Bianchi said.
Bianchi added that this sort of prac-
tice in no way contributes to the serious
discussion of tax reform and called on
consumers to be on guard and report
instances of the illegal practice immediately to the Treasury Department.
“The people who have engaged
in this kind of deception should know
that they are violating the law, and they
are exposing themselves to very high fines,” he said.
Treasury Secretary Juan Zaragoza
warned consumers to pay close attention to their purchase receipts because several cases have been reported in
which businesses allegedly charged the
IVA instead of the sales and use tax (IVU
by its Spanish acronym) that is still being charged for goods and services.
“I want to report that we have received confidential calls about businesses that have altered their [tax] collection system without the changes to the
tax system being approved yet,” Zaragoza said. “Conducting undue collections constitutes a violation of the law.”
One case of the illegal practice reported to Treasury during the past few
days was reported in the town of Maunabo, where the complainant said he
was charged the 16 percent IVA rather
than the 7 percent IVU.
“The complainant said that at the
moment he went to pay his bill he noticed the bill was higher than usual,”
Zaragoza said. “When he asked the
business owner, he was told that ‘Now
we have to charge the IVA.’ That is not
correct.”
Promised IVA Refunds Won’t Pan Out for Many in Need, Senator Says
By EVA LLORENS VELEZ
[email protected]
A
lthough the governor has promised payments to the needy
under the proposed tax reform, a minority senator insists that
the requirements to qualify for the payments may leave a lot of needy families without them.
The governor promised a 100
percent refund of the amount paid in
taxes on their purchases for those earning $20,000 or less and a 50 percent
refund for those making $35,000 or
less.
“However,” said Sen. Margarita
Nolasco, “when we analyze the Tax
System Transformation Bill, we find
that the law is designed to prevent
taxpayers from claiming a refund of
100 percent.”
She noted that the money transfers, which are aimed at fighting the
regressivity of the tax, will be paid
out three times a year. The governor
has said the payments will not exceed
$600.
Nolasco said the law contains a
number of criteria to qualify for the payments ranging from the consumer’s
age, household composition and if the
person has the Nutrition Assistance
Program and WIC.
“That is, the Treasury secretary
will prepare charts to determine how
much, if anything, the agency will
reimburse the poorest, regardless of
what they actually bore in IVA in their
purchases,” she said.
The minority New Progressive
Party senator charged that the legislation contains a lot of hidden clauses
that will result in more costs to consumers and merchants, who will have to
pay more.
On Feb. 15, Nolasco revealed that
the draft Tax Reform contains several
articles that prohibit merchants, at the
risk of incurring a fine, from including
in the receipt or invoice given to custo-
mers the amount they pay in IVA.
The former Senate vice president
also charged that people should not be
fooled by those who testify in favor of
Tax Reform because many have contracts with the government.
The San Juan Daily Star
February 27-March 1, 2015
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The San Juan Daily Star
February 27-March 1, 2015
Governor Inks Law Giving Financial Access to Immigrants
By EVA LLORENS VELEZ
[email protected]
A
s he announced weeks ago, Gov.
Alejandro García Padilla on
Thursday signed into law the
Law of Financial Access for All to make
it viable for immigrants who do not have
a formal residency status on the island to
open up savings accounts at banks and
in savings and loans.
“Many social problems of our immigrant communities are linked to the
barriers faced by lack of access to formal
financial products and services,” the governor said in a statement. “In order to
allow immigrants a better life in Puerto
Rico, I am signing this law that promotes financial security and allows them to
create personal assets, credit history and
a culture of savings.”
Last year, the governor signed into
law legislation that allows immigrants to
obtain a driver’s license. This measure
has benefited more than 100,000 immigrants, most of them Dominicans. That
law was seen as a step toward permitting
immigrants to open up bank accounts.
The new statute provides that a financial institution authorized to operate
in Puerto Rico can open bank accounts to
immigrants.
The new measure prohibits the collection and use of information on the accounts authorized by the law for purposes
of deportation proceedings or other legal
actions related to immigration status.
“Our country is enriched with the
immigrant community that often faces
obstacles that result in unacceptable
forms of marginalization,” García Padilla said. “Everyone living in the Com-
monwealth of Puerto Rico may benefit
from financial products of commercial
banks or credit unions on the island. My
government has guaranteed the immigrant community’s fundamental rights.
We guarantee a right to education, right
to access to health and right to a driver’s
license. Now we give them the opportunity to be part of the formal economy
with this new law.”
The governor recently announced
he is planning to promote a bill that will
allow immigrants to vote in island elections.
Ag Chief Touts Coffee Incentives with Price Hike Still Under Review
By MARIA MIRANDA SIERRA
[email protected]
A
griculture Secretary Myrna Comas said earlier this week that
she has yet to issue any declarations on a possible increase in the price
of a pound of ground coffee and reiterated that the “Department of Consumer
Affairs [DACO by its Spanish acronym]
is the entity that establishes the price and
any possible hikes.”
Comas, however, said the Agricultu-
re Department did in fact conduct a study
on costs throughout the entire chain of
coffee production.
Comas said her administration recently awarded $178,573 in incentives
for Arabica coffee to some 260 farmers in
the towns of San Germán, Yauco, Sabana
Grande, in the Indiera sector of Maricao
and Mayagüez.
In 2014, $16 million was awarded in
incentives to the coffee industry, she noted.
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the resurgence of the coffee industry,” Comas said on Wednesday. “Since the beginning of this administration we have taken
on the task of strengthening the coffee
industry, because we recognize its great
socio-economic contribution. This industry employs more than 10,000 farm workers and affects 21 municipalities, mainly
in the central mountains.”
For the past 16 months, the island
Agriculture Department has awarded incentives to coffee growers, Comas said.
Comas added that coffee growers
also benefit from salary subsidies and
bonuses for farm workers involved in
the cultivation and harvesting of the product.
“In addition, both coffee growers
and pickers were awarded an incentive
per load of harvested mature Arabica
coffee, as a strategy to promote a higher
quality of crop yield,” Comas said. “We
are committed to improving the economic situation of our farmers and farm
workers, fostering the growth of local
production and reducing imports of this
product while we generate jobs.”
Earlier this week, Comas acknowledged that a pound of ground coffee will face a price increase even as she
is seeking a way to mitigate or avoid the
hike altogether.
“There have been increases in costs
in practically all farming expenses. …
From that perspective, yes, you would
have to say that there should be a [price]
increase,” Comas said, adding that the
costs of fertilizers, pesticides, labor and
fuel, among other expenses, have all gone
up.
Observers have said that if coffee
growers get their way, the price of a
pound of ground coffee could rise as high
as $5.93.
“I will make sure the impact is minimal,” DACO Secretary Nery Adames said
last December.
The last time there was a hike in the
price of ground coffee was March 2006,
when it went up from $3.64 to $4.45 per
pound.
The San Juan Daily Star
February 27-March 1, 2015
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The San Juan Daily Star
February 27-March 1, 2015
Puerto Rico Seeks Protection of Federal Bankruptcy Code
P
uerto Rico government officials sought Thursday to convince U.S. legislators that the
island’s financially struggling public
corporations should be allowed to
restructure their debt under the federal bankruptcy code.
The push comes weeks after a
federal judge ruled that a local debtrestructuring law that Puerto Rico’s
governor approved last year was unconstitutional.
Melba Acosta, president of Puerto Rico’s Government Development
Bank, was among those who testified before a U.S. House Judiciary
Committee hearing in Washington,
D.C.
“The fiscal and economic situation in Puerto Rico has reached
a critical moment,” she said. “If the
public corporations default on their
obligations and there is no clear legal regime, creditors may attempt to
engage in a race to the courthouse.”
Puerto Rico Resident Commissioner Pedro Pierluisi has filed a bill
seeking to allow the island’s stateowned corporations to file for Chapter 9 if needed. It would not apply to
debt issued directly by Puerto Rico’s
government.
The U.S. territory is in its eighth
year of recession and is struggling
to reduce $73 billion in public debt,
with public corporations holding
nearly 40 percent of that amount.
Investors have grown increasingly
concerned that the island’s Electric
Energy Authority, which holds about
$9 million in debt, could be one of
the first to possibly go bankrupt.
Moody’s Investors Service said
in a report last week that Puerto Rico
might default on its debt in the next
two years.
The island issued a record $3.5
billion in bonds last year to help generate more revenue, and it expects
to soon issue $2 billion more, bac-
ked by a proposed excise tax increase on crude oil. The revenue would
help strengthen the finances of the
Highway and Transportation Authority, which owes $2.2 billion to Puerto Rico’s Government Development
Bank, about 21 percent of the bank’s
portfolio.
Acosta said that if the bill is not
approved, it would make it more expensive for the government to borrow money and make it harder for
public corporations to become selfsufficient.
Puerto Rico is currently the
third-largest issuer of municipal
bonds in the United States.
Critics say the bill would affect
$48 billion worth of Puerto Rico
municipal bonds and hurt bondholders.
“Puerto Rican law already provides an alternative: receivership,”
said Thomas Mayer, who represents
funds managed by Franklin Municipal Bond Group and OppenheimerFunds, Inc.
The two companies filed a lawsuit that led a federal judge to strike
down the island’s debt-restructuring
law this month.
Bondholders Split on Merits of Chapter 9 for PR Agencies
B
ondholders are split on a
proposed bill to give Puerto
Rico’s ailing public agencies a
way to restructure debt under U.S.
bankruptcy law, with some saying
it would give confidence to the market and others arguing it is a “Wild
West” solution.
The bill to give Puerto Rico’s
agencies the ability to file under
Chapter 9 of the U.S. bankruptcy code
-- used by Detroit, Michigan, and
Stockton, California -- was proposed
by the U.S. territory’s representative
to Congress, Democrat Pedro Pierluisi. It was heard on Thursday.
“[It] would provide confidence
to the municipal markets,” said Morrison & Foerster partner Anthony
Princi, in a letter distributed by Pierluisi ahead of the hearing. Princi represents a group of 32 institutions
holding more than $4.2 billion in
Puerto Rico debt.
FCO Advisors, an investment
firm with exposure to Puerto Rico,
said the consensus from numerous
mutual funds, hedge funds and fi-
nancial institutions was “that the
approach is valid and merits consideration.”
However, Thomas Mayer, a partner at Kramer Levin, who represents
funds managed by Franklin Municipal Bond Group and OppenheimerFunds Inc in respect to their investment in $1.6 billion of Puerto Rico’s
electric utility PREPA bonds, said use
of Chapter 9 will cause more harm
than good.
PREPA is in dire shape, laden
with about $9 billion in debt and
already deep in restructuring negotiations with bondholders. Using
Chapter 9 would force bondholders
to shoulder the burden of PREPA’s
operational failures and Puerto Rico’s
fiscal irresponsibility, Mayer said.
“Chapter 9 is the Wild West,”
Mayer’s testimony said. “The only
certainty is that Chapter 9 takes
a long time -- at least 18 months to
three years -- and is very expensive.”
Pierluisi has argued that the bill
would be in the best interests of all
stakeholders, including creditors.
“So far as I can tell, the opposition to this bill comes from a very
small subset of investment firms,”
said Pierluisi. “I hope that Congress
will not allow such objections to
frustrate forward movement on this
widely supported bill.”
Discussion about the bill was
reignited when a federal court on
Feb. 6 struck down a local law enacted by the Caribbean island granting
agencies similar debt-restructuring
authority.
Puerto Rico’s Government Development Bank said Chapter 9 would
be a “useful tool for Puerto Rico’s
long-term economic success, whether
or not it is actually invoked,” according to testimony from GDB President Melba Acosta.