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Planning Board tells House committee tax reform would inject $550M, cites multiplier and job gains; lawmakers request follow-up data
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Summary
The Planning Board presented a technical evaluation of House Bill 10-14 to the House Finance Committee, saying a $550 million stimulus through tax relief would generate a 2.57 multiplier and roughly 9,139 jobs; lawmakers pressed for sources, sectoral breakdowns and long-term projections and the committee granted five business days for supplemental analyses.
The House Finance Committee on Jan. 30 heard a technical presentation from the Puerto Rico Planning Board on House Bill 10-14, the administration’s proposed income-tax reform. Héctor Morales Martínez, president of the Planning Board, said the board’s simulations treat the reform as a $550,000,000 injection into aggregate demand and estimated sizable short- and long-term effects on production, wages and employment.
"La reforma contributiva sometida por el gobierno ... tiene el objetivo principal de darle alivio contributivo a la mayoría de los contribuyentes," Morales said during his ponencia, reading the board’s memorandum for the record. He told lawmakers the board’s model — an input–output (insumo–producto) matrix — yields a multiplier effect: "cada dólar que el gobierno deja de recaudar ... se transforma en 2 dólares 57 centavos en ... actividad económica," a formulation the board included in its tables.
The Planning Board’s simulations, presented by Morales and Alejandro Díaz (director, Program of Economic and Social Planning), attributed to the measure a mix of direct, indirect and induced impacts that the board said would translate into thousands of jobs. The memorandum and presentation cited a headline figure of about 9,139 jobs across scenarios and said the reform primarily targets middle‑income and working households; the board also proposed doubling the dependent deduction from $2,500 to $5,000.
Committee members immediately pressed the board on assumptions, data sources and timing. Several representatives asked whether the reported impacts are annual or cumulative, which data sets served as baselines and how much of the injected spending would ultimately return to government coffers through consumption taxes or other receipts. Alejandro Díaz explained that short‑term figures reflect direct/indirect effects and that induced impacts rise over time; board staff repeatedly referenced U.S. Census and national accounts inputs used in the simulations.
Lawmakers also questioned differences between the Planning Board’s projections and those recently issued by the Financial Oversight and Management Board (Junta de Supervisión Fiscal). Morales said the board runs multiple scenarios (favorable, base and unfavorable), that model inputs differ across analyses and that he stood by the board’s methodology: "la información que le brindamos al pueblo de Puerto Rico no es cosmética, es la realidad."
The hearing included sustained exchanges on several policy details that members asked the board to quantify: a sectoral breakdown of the projected 9,139 jobs (direct vs. indirect; public vs. private), an estimate of how much of the $550 million circulates back to government revenue (via IVU and other taxes), and longer‑range projections through 2030. In several instances the board agreed to produce the requested runs. The presiding officer accepted motions from members to formally request those supplemental tables and granted the Planning Board five business days — with additional time if needed — to deliver the materials to the committee.
Secretary Sebastián Negrón of the Department of Economic Development and Commerce also attended and voiced the executive branch’s support for the measure, arguing that lower personal rates would complement industrial attraction efforts. He highlighted recent private investments the department has secured and said the reform would align with efforts to expand manufacturing and pharmaceutical activity on the island.
The hearing left several open items the committee said it would pursue in follow‑up: clarified definitions of the multipliers and time horizons, a precise reconciliation of the board’s estimates with the Oversight Board’s forecasts, a jobs disaggregation, and IVA/IVU recapture estimates. The committee adjourned after accepting the Planning Board’s presentation and scheduling the requested supplemental analysis.
