Puerto Rico's Senate sends tax bill back to House

Puerto Rico's Senate sent a tax bill that seeks to raise $1.2 billion back to the lower chamber on Monday in a further delay to the law which the U.S. territory needs to raise financing and ease its precarious fiscal situation.

Puerto Rico is trying to negotiate a bond deal of up to $2.95 billion with hedge funds, which have been pushing for revenue-raising tax measures. It is also seeking short-term financing that officials say is needed to prevent a government shutdown at the start of the fiscal year on July 1.

José Nadal Power, chairman of the Senate's treasury committee, said after a caucus meeting on Monday that he hoped it would "only take a few more days" to send the bill to the governor to sign.

The Senate eliminated a last minute amendment that made its way into the House bill on Thursday. Various food industry sectors had objected to the amendment, which would have expanded the sales tax to include processed, canned and frozen food items.

The Senate's decision to eliminate the amendment means the bill goes back to the lower chamber. The Senate passed the rest of the bill intact. The key provision is an increase in the sales tax to 11.5 percent from 7 percent. It was narrowly approved by the House last Thursday after weeks of opposition.

The Senate passed the bill by 14 votes to 12 votes and has recessed until Thursday.

If the House, which meets on Tuesday, does not object to its amendment being eliminated, the bill can go to Governor Alejandro Garcia Padilla for signing. If it does object, a conference committee will need to work on a consensus bill, which would still need approval from both chambers.

Puerto Rico, with around $72 billion in total debt, has been in or near recession for almost a decade, and its population is shrinking due to migration to the U.S. mainland.



(Reporting a contributor in San Juan Writing by Edward Krudy; Editing by Richard Chang)

Puerto Rico's Senate sends tax bill back to House