Monday, May 27, 2013

Closing the Deficit by Effective Enforcement
2 -27-13 WOSO Commentary

In addition to reforming and updating our various tax laws, we need to effectively enforce our existing laws. For example there are a large number of properties that have been improved and have not been assessed. Surely investing in bringing these properties into the tax system is an economic no brainer.

The same can be said for the IVU or sales tax in which only some 40 % comply whereas in the US this figure is in the mid 60%. Recently, some businesses who have not deposited sales taxes collected have had their bank accounts attached.  This is a great first step. When it is determined that this non deposit is intentional and unjustified, then an effective second step is to bring a criminal action.

We all know that there is serious underreporting of income in Puerto Rico. There needs to be put in place mechanisms to detect when income reported does not match the wealth accumulated and the life style of the taxpayer. I would require taxpayers to file under oath a simple balance sheet describing as of December 31st their assets and liabilities similar to what one provides a bank for a loan.

Effective enforcement of existing tax laws, including criminal actions, will generate substantial revenue, ensure that everyone pays their fair share, and convey the needed message that all laws need to be obeyed.  

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