The Department of the Treasury has reported that preliminary revenues for August and September were more than $100 million higher than those for the same months in 2018.
According to Treasury figures, preliminary net revenues to the island’s General Fund in August and September totaled $773.6 million and $985.5 million, respectively, a year-over-year (Y-O-Y) increase of $103.3 million in August and $152.5 million in September.
“With these collections, the [third quarter of 2019) ended with revenues that totaled $2.81 billion. Compared to the same period during the previous fiscal year, this reflects an increase of $563.4 million, or 25.1 percent,” Treasury Secretary Francisco Parés said.
There were two main revenue drivers for Puerto Rico. The first was corporate income taxes, which totaled $924.9 million in the third quarter (July to September) period, a $524 million Y-O-Y increase. “This increase is due in part to a non-recurring capital gains transaction for a considerable amount made by a corporate entity,” Treasury said, declining to identify the company.
The second revenue driver was individual income tax collections. “During [3Q 2019], revenues in this category totaled $445.9 million, which indicates an increase of $67.5 million compared to the same period last year. This reflects a surge in this category during these months, which was anticipated by other employment and participation indicators that show encouraging behavior for the economy,” Parés said.
Law 154 excise tax collected on foreign controlled corporations showed a slight increase for the third quarter (3Q), from 625.9 million in 2018 to 628.6 million, for an uptick of $3 million.
However, THE WEEKLY JOURNAL analyzed the numbers and found drops in collections during 3Q 2019, namely in collections on the sale of motor vehicles, cigarettes and alcoholic beverages.
Revenues from car sales went down from 120.7 million in 3Q 2018 to 89.6 million for 3Q 2019, representing a drop of 31.1 million.
Collections from cigarettes and alcoholic beverages, also went down by 14.8 million and 17.4 million, respectively, during the same Y-O-Y comparisons.
Another drop was seen in the area of the sales and use tax (IVU by its Spanish acronym). For 3Q 2019, IVU revenues totaled $287.9 million, representing a $12 million Y-O-Y decline that “mainly reflects a change in the way that collections are registered,” Treasury said.
The implementation of a new methodology to report IVU collections implies the publication of a new report, which presents the periods from July to September of this fiscal year and incorporates the changes required by the bond restructuring of the Sales Tax Financing Corp. (Cofina by its Spanish acronym) and Cofina’s Third Amended Adjustment Plan under Title III of Promesa,” the agency added.
According to the Treasury chief, a main difference of the new methodology is the “biweekly payments pending the filing of returns and overpayments by large taxpayers, so the reduction with respect to the previous fiscal year is mainly attributed to the discrepancy between periods with different methodologies.”
As such, the recent IVU collection results cannot be compared with previous reports in other fiscal years, Parés noted.
With respect to tax collections from car sales, Puerto Rico’s United Automobile Importers Group (GUIA by its Spanish acronym), has reported a continuing decline in new car sales, with a 9.5 percent decrease in September compared to the same month last year. GUIA reported new car sales of 7,546 units in September, compared with 8,335 units sold in Sept. 2018.
For the year, GUIA is reporting a 2.2 percent decrease in new car sales.