Puerto Rico Tourism Company opposes bill to earmark occupancy tax for Porta del Sol

The House of Representatives’ Tourism Commission met on Monday, Sept. 8, to consider House bills PC 558, PC 699 and PC 761. At the hearing, Raúl Márquez Hernández, legal and legislative adviser to the executive director of the Puerto Rico Tourism Company, presented the agency’s written position and said the company cannot back PC 558, the measure that would require a proportional share of the room occupancy tax (canon por ocupación de habitación) be allocated to the Porta del Sol tourism destination.

The tourism company’s memorial argued that Article 31 of Law 272 of 2003 currently establishes a centralized, programmatic distribution of occupancy-tax revenues and that PC 558 would “despojar” the agency of operational discretion. “El modelo propuesto ... compromete la prioridad fiscal programática operativa de la entidad responsable de implementar la política pública turística del gobierno de Puerto Rico,” Márquez read.

The company told the commission that the current distribution of the canon funds supports multiple priorities including transfers to the Puerto Rico Convention District, an annual allocation to the destination marketing organization (DMO), a matching fund for the DMO and additional sums certified in the budget by the Financial Oversight Board. The memorial listed dollar figures for those allocations but framed them as part of the centralized funding model the company says PC 558 would fragment. The company also stated that changing the distribution by law could affect the government’s certified fiscal plan and the sustainability of the Convention District’s finances.

Márquez recommended the commission seek technical analyses from the Financial Advisory and Fiscal Agency (Autoridad de Asesoría Financiera y Agencia Fiscal, AFAF), the Office of Management and Budget (Oficina de Gerencia y Presupuesto, OGP) and the Department of Treasury (Departamento de Hacienda) before advancing a measure that alters the source or disposition of revenues included in fiscal projections. He said the Convention District representative was excused and would submit written testimony later.

The tourism company warned PC 558 could produce unequal regional outcomes because it would require automatically earmarking revenues for one region without using performance criteria, return-on-investment measures or other territorial needs assessments. The memorial argued such a formula could set a precedent prompting similar claims from other tourism regions and would limit the company’s ability to carry out a unified islandwide promotion strategy.

Commission members present asked questions after the reading and signaled they would consult tourism and other agencies before deciding whether to request formal reports from AFAF, OGP and the Department of Treasury. The commission’s agenda also lists PC 699, a bill to amend Article 31 to distribute 1% of the occupancy tax to the Puerto Rico Police Bureau for security equipment, and PC 761, a bill proposing changes to Law 158 (Dec. 20, 2005) that would expand tax-incentive benefits for the tourism industry in the Porta del Sol region. The hearing record shows no formal vote on any of the bills during the session.

The tourism company’s written statement was signed on behalf of the executive director and submitted to the commission; the company recommended the commission solicit the technical opinions named above prior to considering PC 558 further.