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Tax Choice Comes to Puerto Rico

By: Frank Worley-Lopez - Sep 15, 2014, 12:25 pm
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The mayor of San Juan, Puerto Rico has introduced “tax choice” to the island. (Flickr)

EspañolI wish I could take sole credit for this one, but it may not have been entirely my idea. The city of San Juan, Puerto Rico is allowing residents in some communities to vote on how to spend a portion of the city budget. This is great news, and something I proposed nearly a year ago here on the PanAm Post.

The November 2013 article I wrote questioned whether government would be more responsive if the general public had the right to vote on where to spend at least part of the budget. I wondered how many programs would survive this type of process. I have always believed that tax choice would be a powerful weapon against “pork” projects and pay offs to campaign contributors, since the general public would have little to no motivation to fund such items.

The town of Caimito, which falls under the City of San Juan, is the first community on the island to participate in the program, according to a report in El Nuevo Dia.

Residents will get to choose how to spend US$250,000 on permanent improvement projects. It is part of a broader plan being implemented by San Juan Mayor Carmen Yulin Cruz. It turns out that other cities in California, New York, Brazil, and Spain have also implemented this kind of public participation. So, while we can’t take all of the credit for this here at the Canal, it is still nice to see some of our ideas being implemented.

Other San Juan communities, such as Luis Llorens Torres and Venus Gardens, will also be included in this $1.3 million effort.

While the island’s fiscal problems are many, this program is certainly a step in the right direction, and will earn Mayor Yulin Cruz some public support. However, we should expand our focus beyond just public spending. In order for Puerto Rico to recover from its now eight-year-long depression, it will need to learn some fiscal discipline. This, of course, means cutting spending and unnecessary programs, but it also means cutting the public workforce.

While Caimito voted at the ballot box last week, other Puerto Ricans continue to vote with their feet. The exodus of the island’s best and the brightest continues, as recently explained in an oped by former Caribbean Business writer Elisabeth Roman.

In her article, Roman describes her reasons for leaving Puerto Rico, and relays personal accounts from others who have done the same. According to the testimony in the column, the economy is only part of the equation. Government corruption, partisanship, crime, and insecurity were also reasons cited.

How do you continue to live under the constant threat of violent crime every single day? How long could you last under a government that focuses on ridiculous political issues, and is either uninterested or incapable of dealing with crime? Add higher taxes, increased regulations, higher prices on consumer items, and miserable job prospects, and the answer you will get is a resounding “No thank you.”

Puerto Rico’s planning board says the island’s population could continue to decline into 2020. While that isn’t surprising, it should be a wake up call. Without those hard-working professionals who are now leaving the island, how can the government keep up with 285,000 public employees on its payroll? Even with recent agreements with unions, the fundamental problem of over-sized government is never addressed.

So, let us applaud the San Juan mayor’s baby steps forward, but keep a cautious eye on the horizon. Puerto Rico has much farther to go before it can rest easy.