Capitol- The chairman of the House of Representatives Government Committee, Víctor Parés, said Monday that there are no funds available to suspend the second fuel excise tax (crudita, Law 1-2015). “This House of Representatives, led by our Speaker, Carlos ‘Johnny’ Méndez, will not approve anything that lacks replacement revenue sources other than imposing greater burdens […]
Capitol- The chairman of the House of Representatives Government Committee, Víctor Parés, said Monday that there are no funds available to suspend the second fuel excise tax (crudita, Law 1-2015).
“This House of Representatives, led by our Speaker, Carlos ‘Johnny’ Méndez, will not approve anything that lacks replacement revenue sources other than imposing greater burdens on the people. Suspending the second crudita — imposed by the Popular Democratic Party in 2015 — costs $217.4 million that would have to come from eliminating basic services to the people, and we will not do that,” Parés said in a written statement.
He explained that on November 1, 2023, the Fiscal Oversight Board sent a communication establishing that revenues from these fuel excise taxes on gasoline and diesel “represent a significant portion of Puerto Rico’s budget to sustain the cost of basic services to the people.”
“In April, the Speaker, together with myself, commissioned a technical study from the Office of Budget of the Legislative Assembly (OPAL), which determined the cost of suspension: $217.4 million for fiscal year 2027, which begins July 1. It is equally irresponsible for the PPD Minority Leader to claim that the cost of a 45-day suspension of this excise tax — which his party imposed — is $19.1 million. The real cost is close to $30 million. We must act responsibly, or the Oversight Board will never leave Puerto Rico. Perhaps that is what the PPD leadership seeks — to perpetuate the Board with unrealistic proposals,” the legislator added.
He noted that the island receives 90.6 percent of its gasoline through West Texas Intermediate (WTI) crude from wells in Texas and Oklahoma, with the remainder — just under 10 percent — coming from Colombia, Mexico, African nations, and Trinidad and Tobago.
Parés noted that while WTI supply is not directly tied to military events in the Middle East, the hydrocarbon market is volatile and speculative, and therefore affects everyone. Puerto Rico’s average monthly gasoline consumption is 70 million gallons.
The WTI barrel closed Saturday at its lowest level in 35 days, at $86.67 — a drop of $4.01 from Friday. The pump price per liter of regular gasoline has fallen from $1.21 to $1.09 in several locations.
On May 3, 2022, Joint Resolution 240 became law, establishing a 45-day moratorium on the second fuel excise tax on gasoline and diesel. To cover the revenue loss, the Joint Underwriting Association declared an extraordinary dividend of $50 million from its capital reserves, accompanied by a special 50 percent contribution, disbursing $25 million to the General Fund. However, the actual cost of that suspension exceeded $39.3 million.
