Tuesday, October 26, 2010

Throwing us a Bone

This past Monday, Gov. Fortuño unveiled his new tax reform plan, which promises to put "más dinero en tu bolsillo" (translation: more money in your pocket). This plan calls for a gradual decrease of taxes for all taxpayers immediately beginning income tax year 2010. By 2016, those with an annual income of $20,000 or less would pay 0% income taxes. An estimated 450,000 taxpayers fall under this tax bracket. For a breakdown of the new income tax rates, please click on the image to the right. Local businesses and corporations will also see their tax rates lowered. In order to finance this tax reform plan, a 4% excise tax will be levied on foreign corporations with operations on the island starting income tax year 2011. This corporate tax will be gradually lowered until 2016, when it phases out.

The excise tax on foreign companies is expected to bring in a total of $1.4 billion in its initial year, and a total of $5.689 billion in its entirety, while "más dinero en tu bolsillo" is expected to save taxpayers (or cost the government coffers) $1.2 billion during the first year. One important, but little mentioned caveat is that the tax reform plan calls for an evaluation to be done in 2013 to weigh-in on the effects of the tax cuts. The approval of the Puerto Rican Congress would be required in order to continue with the rest of the tax reductions slated for 2014 through 2016. After all, the tax cuts largely depends on the assumption that these foreign companies, which are mostly in the pharmaceutical industry, would remain on the island.

Fortuño's plan has largely been met with a warm reception, except for those from the opposing parties, naturally. Some claim it's too little too late. On the other hand, there were many Fortuño supporters yelling "cuatro años más" (translation: four more years). The governor is up for re-election in 2012. Meanwhile, other critics have made some valid points. Tax breaks are meant to provide short-term relief, as well as garner points for politicians who depend on their constituents' votes to stay in office. The economist Thomas Friedman rightly likens such policies to the injection of "steroids, instead of doing real bodybuilding." In the long run, what sustains and brings about a robust and dynamic economy is innovation, productivity, and an environment where businesses and individuals can flourish.

(Note: The graphic above appeared on www.endi.com).

Wednesday, October 20, 2010

The Green Way

Vía Verde (translation: "The Green Way") is a local Puerto Rican government initiative to lessen the island's dependence on petroleum, and to find a more environmentally sustainable energy source. To accomplish such a goal, the administration of Gov. Fortuño has been wholeheartedly pushing for the construction of a 91mile natural gas pipeline (el gasoducto), which would run from south to north of the island. In fact, the government is so keen to go forward with this project, that an estimated amount of savings is already included on the monthly electricity bill should el gasoducto be built. According to the Executive Director of the Puerto Rican Electric Power Authority (PREPA), Miguel Cordero, households will see a reduction of about 20% in their energy bills. Gov. Fortuño says the island is currently undergoing an "energy crisis" and the public should throw its support behind la Vía Verde.

The cost of electricity in Puerto Rico is, by some estimates, twice that of the mainland U.S'. This is a major achilles' heel to the local economy as it makes business' operating costs more expensive. An estimated 70% of the island's electricity comes from imported oil, and about 1% of the island's electricity comes from renewable energy resources, such as solar and wind. The Puerto Rican government acknowledges the need to diversify the island's energy portfolio, and it has pledged to increase the share of renewables to 12% by 2015 and 20% by 2035. Meanwhile, the construction of a gas pipeline seems to be the quickest way to appease household budgets and create jobs.

Much to Gov. Fortuno's chagrin, Vía Verde has been met with a massive opposition, especially amongst environmental groups and the communities in which the gas pipeline would be traversing. Such critics argue that the construction of el gasoducto will have a seriously negative environmental impact on the island's wildlife, flora and fauna. Furthermore, critics also point out that gas is just another type of fossil fuel. The fate of el gasoducto is on shaky ground, but most would agree that the island cannot continue to rely on imported foreign oil as its primary energy source.

(The image above was obtained from www.endi.com)

Tuesday, October 12, 2010

Not Living in Paradise

A friend of mine who lives in Seattle recently sent me an e-mail saying, "so jealous you get to live in paradise." He was referring to the fact that his city gets nothing but gloomy skies and rain, while we get lots of sun here on the island. I must also add that this friend of mine has never been to Puerto Rico, which tends to conjure images of beach, sun and palm trees for most people. While we are indeed blessed with such things here, there are also a whole litany of social problems on the island which many are not aware of. Violence, corruption, a crumbling public education system and a rising crime rate are just some of the many issues facing the island.

Drug trafficking is also one of the biggest problems confronting Puerto Rico. Last week's massive FBI operation serves as a perfect example of just how far drug traffickers have been able to exert their power. According to a recent article published in this past Sunday's El Nuevo Día, drug trafficking is the third largest economic activity in Puerto Rico. Just in case you're wondering, manufacturing and tourism are the two principal industries on the island. As the mainstream U.S media mostly focuses on Mexico with drug trafficking, and rarely talks about Puerto Rico, drugs is probably not something most people would associate the island with.

Given Puerto Rico's geographical location, it is situated between North and South America, it has always been an attractive midway point for the transportation of drugs. Startlingly, some of the drugs were even shipped via the U.S Postal Service, and seven postal workers were arrested by the Drug Enforcement Administration (DEA) just two weeks ago. While I do mostly enjoy living in Puerto Rico, it is certainly no paradise. The island has got its fair share of issues and challenges.

Thursday, October 7, 2010

Operation Guard Shack

Yesterday was yet another historic day for Puerto Rico, as well as for the Federal Bureau of Investigation (FBI). An estimated 133 police officers, which also includes some on the municipal level, national guards, and U.S Army soldiers, amongst others, were arrested for corruption. They allegedly aided drug traffickers by providing protection during drug deals and received between $500 to $4,000 for each transaction. This was the FBI's largest police corruption investigation in its 102 year history, and it's called Operation Guard Shack.

U.S Attorney General Eric H. Holder gave a press conference and said the following: “This department has one message for anyone willing to abuse the public trust for personal gain: You will be caught. You will be stopped. And you will be punished.” Sadly, corruption is pervasive in all levels of the Puerto Rican government. In general, public confidence in the local government is less than sanguine. This is especially true of the local police force, who are seen as inept in combating crime and (yes) corrupt.

Luis Fraticelli, the head of the FBI office in Puerto Rico, and José Figueroa Sancha , the Superintendent of the Puerto Rico Police Department, were both quick to add that the actions of these arrested police officers are not representative of the entire police force on the island. Actions will have to speak louder than words though. Evidently, Operation Guard Shack sends a powerful message that corruption has no place in law enforcement. Moreover, it also reminds us of the significance in having federal law enforcement agencies present on the island.

(Image above was obtained from www.endi.com)

Wednesday, October 6, 2010

Breast Cancer Awareness

This Sunday, the 10th of October, hundreds (if not thousands) of people in Puerto Rico will either be walking or running the 5K "Race for the Cure" organized by the Susan G. Komen Foundation. October is breast cancer awareness month, a disease in which 1 in 13 women born on the island were diagnosed with between 1999-2003. Moreover, it is the most common cancer developed among Hispanic women. Many people are unaware of this fact but breast cancer is also a disease which can affect men. Like most cancers, early detection is crucial and performing a breast self exam can be extremely helpful to that end.

Here are some important facts and statistics on breast cancer:
(The graphic above was obtained from Wikipedia)