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Hurricane-blasted Puerto Rico fears GOP tax bill will be ‘another storm’ for economy

Under the GOP tax plan, Puerto Rico is treated in some ways as a foreign entity, not a U.S. territory. Local officials warn that one provision could drive out drugmakers and manufacturers, at a time when a third of the island is still without power in the wake of Hurricane Maria. Jeffrey Brown talks to Carlos Mercader, spokesman for the governor of Puerto Rico, about how the bill will affect jobs.

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  • Judy Woodruff:

    One aspect of this tax bill that hasn’t gotten as much attention, a couple of provisions that may hit the economy of Puerto Rico, even as the island struggles to recover fully from Hurricane Maria.

    Jeffrey Brown zeros in on that.

  • Jeffrey Brown:

    That’s because the bill treats Puerto Rico in some ways as a foreign entity, not a territory of the U.S. Specifically, it includes a higher tax rate on corporate from intellectual property.

    Local officials warn that could drive out drugmakers and other manufacturers. It comes as a third of Puerto Rico is still without power and in a week when the government announced it will review all deaths in the aftermath of the hurricane, that after several independent investigations found the number of deaths was much higher than officially reported.

    Carlos Mercader is a representative on the mainland for governor Ricardo Rossello.

    He joins me now. Welcome to you.

  • Carlos Mercader:

    Thank you.

  • Jeffrey Brown:

    So, start with the tax bill.

    Why do you think it would be such a blow? What are implications?

  • Carlos Mercader:

    Yes, Puerto Rico, it’s a U.S. jurisdiction.

    And we were asking Congress to treat Puerto Rico under the current tax bill as a U.S. jurisdiction. The fact is that, basically, they are penalizing Puerto Rico with the taxes that they are imposing on foreign corporations or foreign territories.

    What we were saying is that every job in Puerto Rico is a U.S. job. It’s an American job. And if the tax bill wanted to protect American jobs, they would have had included Puerto Rico as a U.S. jurisdiction, and they wouldn’t be penalizing those jobs in the island with the taxes that they just passed.

  • Jeffrey Brown:

    So far, we haven’t seen any companies threaten to leave.

  • Carlos Mercader:

    Well, everyone is saying that they are going to be looking at how is the implementation of this tax bill, and, obviously, remember, we’re going to be competing against foreign jurisdictions.

    We’re not even competing within the U.S., we’re competing against other foreign countries which basically don’t have the same set of rules, the seam set of laws, the same set of regulations that Puerto Rico has.

  • Jeffrey Brown:

    But have any companies told you quietly that they will leave? They may change — yes?

  • Carlos Mercader:

    They mentioned that they’re analyzing their situation.

  • Jeffrey Brown:

    Separately, there is this disaster aid idea going through Congress right now, a lot of money for all the recent disasters, with some of it earmarked for Puerto Rico, but not nearly as much as you have asked for.

  • Carlos Mercader:

    No. Well, yes.

    And while we appreciate that Congress right now, it has basically raised the amount of moneys that are going to be included in that aid package, we’re still saying that we need to tackle the Medicaid cliff that we’re facing.

    Basically, it’s that Puerto Rico, after February of 2018, will have no federal money to run its Medicaid program. And we need to basically find the moneys in this supplemental aid package to cover that cliff that we are going to be facing in February.

  • Jeffrey Brown:

    But those were the kind of problems that were pre-hurricane. Right?

  • Carlos Mercader:

    Yes, but obviously those are heightened by the situation of the hurricane.

    And what we’re asking is the same thing that happened in New Orleans after Katrina, in which the federal government covered for 24 months the federal and the state share on the Medicaid front.

  • Jeffrey Brown:

    Let me move to the question of the death count, because that just came up this week.

    The governor, your governor acknowledged this week that the death toll may be higher than it has been acknowledged so far. This was after he kind of stuck to that number for a long time.

    What has changed, and why did the government stick to the number for so long?

  • Carlos Mercader:

    Well, the government basically has a process of analyzing, and very fine, that all of the deaths that happened after a storm directly or indirectly related to the storm.

    So, in a process of seeking transparency, what he has basically asked is that — one thing, that they investigate each and every death that occurred after the storm. And then he commissioned an expert panel, so that they go back and see that process that the government had when the storm happened to make sure that that’s the best process to really identify the real cause of death of a person that died after the storm.

    And this is very important. Life, it’s much more important than numbers. So, here, every death that happened after the storm needs to have the real information, what really happened.

  • Jeffrey Brown:

    But, very briefly, I mean, those numbers could be off by hundreds, right?

    Will be there — do you have the efficiency, the funding for a real count now?

  • Carlos Mercader:

    Yes, yes.

    And, actually, the process has always been open, meaning that the governor has always recognized that, since this was such a big catastrophe, obviously, the number of deaths could be high, and higher than the number that we have.

    The thing is that, with the numbers that are out there right now, that’s why he has asked for each and every death to be investigated — re-investigated again, calling in doctors, and just making sure that really the cause of death was really a natural cause of death or related to the storm, and then, obviously, calling in these experts, so that they can chip into that government process.

  • Jeffrey Brown:

    All right, Carlos Mercader, thank you very much.

  • Carlos Mercader:

    Thank you.

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