Given the claims of retirees from the public sector who demanded some type of incentive that benefits them in a similar way to the relief that the salaried class is anticipated to receive during the next tax period, the governor Pedro Pierluisi argued this Friday that it is not a possibility in the short term due to the restrictions imposed by the Fiscal Oversight Board (JSF) and the Adjustment Plan of the central government, confirmed two years ago.
“We wanted to provide broad tax relief for the working middle class and non-exempt corporations, including SMEs (small and medium-sized businesses), using (budgetary) surpluses, and the Board stood in the way. What it allowed was that we gave relief this year for $250 million, which is very different from the approximate $550 million that we proposed,” said Pierluisi.
“I do not close the door to, in the future, if the government’s finances allow it, giving relief to pensioners, whether contributory, some type of adjustment (for inflation)”the chief executive added in a meeting with journalists.
On Thursday, dozens of retirees from the central government demanded, in a demonstration in front of Strength, that the government include them in the legislation that will make the agreement with the Board viable to provide tax relief in the upcoming payroll season. The relief will be reflected through what the government has called a “refundable incentive,” after the taxpayer files their returns.
Among the groups that demonstrated were the Teachers Federationthe Federation of Managerial Employees of the Commonwealth, the Retirees Board and the Puerto Rico Police Veterans Association.
Pierluisi stressed, however, that the central government’s Adjustment Plan imposes a prohibition on the restoration of defined benefit pension systems and adjustments for inflation, which complicates any additional disbursement to this sector.
“The Adjustment Plan that the court approved has a 10-year prohibition on pension plans in Puerto Rico being modified, and the Legislature of Puerto Rico endorsed it in the legislation that was enacted. In other words, anyone who is thinking that a pension is going to be changed, and a defined pension is going to be reestablished, is speaking without knowing. Let no one expect that,” said Pierluisi, remembering that the ban on any change in pension plans will be extended for at least eight additional years.
“A special bonus, that is another thing and carefully perhaps it can be done, but, first, we would have to have the liquidity in the government to be able to do it. While the Board is here, and I am counting the days until it leaves, we would have to talk about the issue so that it does not get in the way. I would love to give some type of bonus to all retirees in Puerto Rico, but it cannot be that a pension system is changed,” he reiterated.