2 February 27-March 1, 2015 Marine Diver Self-winding movement. Water-resistant to 300m. 18 ct rose gold case. Also available in stainless steel. U LY S S E - N A R D I N . C O M The San Juan Daily Star GOOD MORNING 3 February 27-March 1, 2015 The San Juan Daily Star has exclusive New York Times News Service in English in Puerto Rico Anti-IVA Mobilization Gets Underway This Weekend By MARIA MIRANDA SIERRA [email protected] A INDEX Local Mainland Business International Viewpoint Wine Entertainment 3 11 16 20 25 28 30 Lottery Winners Legal Notices Sports Games Horoscope Cartoons 33 35 41 45 46 47 n array of protests, activities and assemblies have been confirmed to take place this weekend and well into next week against the implementation of the value-added tax (IVA by its Spanish acronym). The various groups that have one thing in common: they are all against the 16 percent IVA proposed by the administration of Gov. Alejandro García Padilla. From diﬀerent unions, parents and students to teachers, citizens in general and New Progressive Party (NPP) grassroots supporters and even Popular Democratic Party (PDP) faithful, these groups have the same goal: to do everything possible so that the IVA will not be implemented. Others have suggested that if the IVA is realized, it should be kept at a 7 percent rate just like the current sales and use tax (IVU by its Spanish acronym). Teachers union Educamos, the Electrical and Irrigation Workers Union (UTIER by its Spanish acronym) and the UTIER Solidarity Pro- gram (Pro-Sol UTIER) will be participating in an assembly called by the movement “We Are All the People,” or “Todos Somos Pueblo,” slated for Saturday at 1 p.m. at the Inter American University School of Law Amphitheater in the Hato Rey sector of San Juan. The movement, led by Rev. Pedro Rafael Ortiz, also comprises the Faros Alliance, Proyecto Pesca, Navarro Community in Gurabo, the Puerto Rico Energy Alliance, the First Baptist Church of Caguas, the Archdiocese Social Action Council, National Education Educators and Workers Union (UNETE by its Spanish acronym) and State Insurance Fund (SIF) union workers, among others. According to union leaders Eva Ayala (Educamos) and Luis Pedraza Leduc (Pro-Sol UTIER,) the idea of holding the assembly is to look for other options to propose a “real” integral tax reform aimed at addressing the people’s needs and to determine the next steps to take to demonstrate their rejection of the IVA. “We also recognize that there is an existing need to restructure the public debt,” Pedraza Leduc told the STAR. Continues on page 4 4 From page 3 Meanwhile, the STAR learned that Sacred Heart Catholic Elementary School in San Juan Principal Sister Mary Andreen sent parents an email stating that on March 5 a rally will be held at the Capitol building to protest the proposed tax on private education. “If at all possible, we would ask you to please get to the Capitol and show your dissatisfaction with this imposition on the families of our schools,” Andreen said. “Most families will meet there from 9 a.m. to 11 a.m. The Catholic Schools will meet on the north side of the Capitol building at 9 a.m.” Andreen said the protest should last approximately until 11:30 a.m. “Parents, high school and college students will be present at the rally. We, as an elementary school, will have classes. We will also pray that this [legislation] does not The San Juan Daily Star February 27-March 1, 2015 pass,” she added. “Please try to be present at the rally. You know there is strength in numbers. Show your support for Catholic education.” Meanwhile, this past Wednesday, a number of members of the Union Coalition met to determine the steps to take since the tax reform was filed at the Capitol and public hearings began last week. The Coalition is composed of the Puerto Rican Central Workers Union (CPT by its Spanish acronym), the Puerto Rico Teachers Federation (FTPR by its Spanish acronym) and the Central Workers Federation (FCT by its Spanish acronym). After the meeting concluded, Public Buildings Authority Workers union leader Federico Montalvo, who served on the tax reform advisory committee, said the coalition decided to hold a second meeting slated for Tuesday, March 3, where most unions will be participating. On March 5, the coalition will be giving depositions at the public hearings on tax reform at the Capitol. As for the NPP faithful who will also be protesting the IVA at the Capitol, NPP gubernatorial candidate hopeful Ricardo Rosselló called for a united front to demonstrate against the proposed IVA on Sunday at 11 a.m. in front of the Capitol building. His protest is called “Halt the IVA.” “My call to the governor was to bring together all sectors and allow them the necessary time to achieve a transparent and thorough discussion. I then presented six possible alternatives for addressing the problem,” Rosselló said. “Other leaders and sectors have presented other proposals; however, the reaction [of the governor] has been one of attack and lack of seriousness, declaring that all those who oppose the most dramatic tax hike in the history of Puerto Rico are ‘tax evaders.’” He said that in the face of this reality there is no other alternative but for the people to organize and express their indignation. Looking to Sell Tax Reform, Governor Meets with Metro-Area PDP Leaders By MARIA MIRANDA SIERRA [email protected] G ov. Alejandro García Padilla summoned Popular Democratic Party (PDP) leaders from the San Juan metro area to a meeting late Thursday afternoon to apparently try to sell them on his proposed tax reform and the implementation of the 16 percent value-added tax. The meeting at party headquarters in the capital city’s Puerta de Tierra sector was to take place as San Juan Mayor Carmen Yulín Cruz has openly stated that she opposes the value-added tax (IVA by its Spanish acronym), and after she has already participated in protests against its implementation and has said she will continue engaging in similar demonstrations. Senate President Eduardo Bhatia has also hinted he will not vote in favor of the tax reform if certain areas aren’t addressed in the legislation. The at-large senator also suggested that the government renegotiate its debt and dramatically reduce operational costs. PDP Secretary General Jorge Suárez reportedly said the governor invited leaders and committee chairs from San Juan, Trujillo Alto and Cataño. Cruz’s press oﬃcial, Carmen Serrano, said the San Juan mayor was not invited to the meeting. Mayors Association President Rolando Ortiz said he hadn’t been notified about the gathering either, but that if he has to go he will be there. Ortiz tried to distance himself from the public dispute within the PDP between IVA supporters and opponents. “It’s a stage in the deliberation process between the parties and in the end they will reach a consensus,” Ortiz said. The governor has been holding meetings across the island on the tax reform and the changes that the new system will bring. The San Juan Daily Star February 27-March 1, 2015 5 Implementation of Gender-Equality Curriculum Oﬃcially Begins By EVA LLORENS VELEZ [email protected] E ducation Secretary Rafael Román on Thursday released the circular letter that oﬃcially began the implementation of a gender-equality curriculum in public schools, a move that has been criticized by religious groups in recent weeks. Supporters of the initiative contend that young children are aware that color, language, gender, and physical ability are connected to privilege and power. Racism and sexism have a profound influence on children’s developing sense of self and others, experts say. Many groups are promoting a gender-equality curriculum to help young children develop anti-bias attitudes, learn to think critically, and speak up when they believe something is unfair. Supporters contend that a gender-equality curriculum will help reduce the rampant violence toward women. Religious groups contend, on the other hand, that the curriculum will promote homosexuality as an acceptable practice and teach young children that sex before marriage is acceptable, thus promoting promiscuity. “The Government of Puerto Rico, in exercising its social responsibility to promote human rights, argues for the [quest] as a fundamental principle of equity among human beings,” reads circular letter in its preamble. “The Department of Education of Puerto Rico is essential in that eﬀort. The public education system, a fundamental entity of Puerto Rican society, can not be oblivious to social inequalities and corresponds to foster a culture of peace, justice and fairness.” The goal of the new public policy is to strengthen and institutionalize gender equity in all academic disciplines, levels, initiatives and projects of the Department of Education. To achieve this, the agency said it is committed to transforming and implementing the content and curriculum practices, providing services and disseminating information that promotes gender equity. The circular letter states that the objective is to eliminate gender disparity and promote progress toward achieving equity. “With the implementation of this public policy, we move a step forward to address a fundamental issue that the whole country must agree on: social inequalities are detrimental to community life,” Román said. “Today we reaﬃrm our commitment to educating students in the public system and Puerto Rico that all human beings deserve the same respect and dignified treatment.” 6 The San Juan Daily Star February 27-March 1, 2015 Some Businesses Said Illegally Charging IVA By MARIA MIRANDA SIERRA [email protected] S ome businesses in a number of island towns have allegedly already started charging consumers the value-added tax even though it has yet to be implemented, let alone be passed into law, several consumers have warned the Treasury Department. Early Thursday, Popular Democratic Party Rep. Carlos Bianchi filed legislation to investigate those businesses that have been reported by consumers for being charged for the value-added tax (IVA by its Spanish acronym). House Bill 1206 orders the Consumer Aﬀairs Commission to conduct an exhaustive investigation into the alleged recent practice by businesses of including the IVA in their sales. “Recently, and while the legislative assembly is in the process of evaluating the new tax system that will allow for dramatic reductions in tax evasion and will make the tax load more equitable … reports have come to light that uns- crupulous businesses have started to charge the IVA for their services,” reads the bill. “We can not allow that, while we engage in the appropriate legislative procedure for this far-reaching legislation … insensitive people exist who take advantage of the circumstances for their own illegal personal economic benefit,” Bianchi said. Bianchi added that this sort of prac- tice in no way contributes to the serious discussion of tax reform and called on consumers to be on guard and report instances of the illegal practice immediately to the Treasury Department. “The people who have engaged in this kind of deception should know that they are violating the law, and they are exposing themselves to very high fines,” he said. Treasury Secretary Juan Zaragoza warned consumers to pay close attention to their purchase receipts because several cases have been reported in which businesses allegedly charged the IVA instead of the sales and use tax (IVU by its Spanish acronym) that is still being charged for goods and services. “I want to report that we have received confidential calls about businesses that have altered their [tax] collection system without the changes to the tax system being approved yet,” Zaragoza said. “Conducting undue collections constitutes a violation of the law.” One case of the illegal practice reported to Treasury during the past few days was reported in the town of Maunabo, where the complainant said he was charged the 16 percent IVA rather than the 7 percent IVU. “The complainant said that at the moment he went to pay his bill he noticed the bill was higher than usual,” Zaragoza said. “When he asked the business owner, he was told that ‘Now we have to charge the IVA.’ That is not correct.” Promised IVA Refunds Won’t Pan Out for Many in Need, Senator Says By EVA LLORENS VELEZ [email protected] A lthough the governor has promised payments to the needy under the proposed tax reform, a minority senator insists that the requirements to qualify for the payments may leave a lot of needy families without them. The governor promised a 100 percent refund of the amount paid in taxes on their purchases for those earning $20,000 or less and a 50 percent refund for those making $35,000 or less. “However,” said Sen. Margarita Nolasco, “when we analyze the Tax System Transformation Bill, we find that the law is designed to prevent taxpayers from claiming a refund of 100 percent.” She noted that the money transfers, which are aimed at fighting the regressivity of the tax, will be paid out three times a year. The governor has said the payments will not exceed $600. Nolasco said the law contains a number of criteria to qualify for the payments ranging from the consumer’s age, household composition and if the person has the Nutrition Assistance Program and WIC. “That is, the Treasury secretary will prepare charts to determine how much, if anything, the agency will reimburse the poorest, regardless of what they actually bore in IVA in their purchases,” she said. The minority New Progressive Party senator charged that the legislation contains a lot of hidden clauses that will result in more costs to consumers and merchants, who will have to pay more. On Feb. 15, Nolasco revealed that the draft Tax Reform contains several articles that prohibit merchants, at the risk of incurring a fine, from including in the receipt or invoice given to custo- mers the amount they pay in IVA. The former Senate vice president also charged that people should not be fooled by those who testify in favor of Tax Reform because many have contracts with the government. The San Juan Daily Star February 27-March 1, 2015 7 8 The San Juan Daily Star February 27-March 1, 2015 Governor Inks Law Giving Financial Access to Immigrants By EVA LLORENS VELEZ [email protected] A s he announced weeks ago, Gov. Alejandro García Padilla on Thursday signed into law the Law of Financial Access for All to make it viable for immigrants who do not have a formal residency status on the island to open up savings accounts at banks and in savings and loans. “Many social problems of our immigrant communities are linked to the barriers faced by lack of access to formal financial products and services,” the governor said in a statement. “In order to allow immigrants a better life in Puerto Rico, I am signing this law that promotes financial security and allows them to create personal assets, credit history and a culture of savings.” Last year, the governor signed into law legislation that allows immigrants to obtain a driver’s license. This measure has benefited more than 100,000 immigrants, most of them Dominicans. That law was seen as a step toward permitting immigrants to open up bank accounts. The new statute provides that a financial institution authorized to operate in Puerto Rico can open bank accounts to immigrants. The new measure prohibits the collection and use of information on the accounts authorized by the law for purposes of deportation proceedings or other legal actions related to immigration status. “Our country is enriched with the immigrant community that often faces obstacles that result in unacceptable forms of marginalization,” García Padilla said. “Everyone living in the Com- monwealth of Puerto Rico may benefit from financial products of commercial banks or credit unions on the island. My government has guaranteed the immigrant community’s fundamental rights. We guarantee a right to education, right to access to health and right to a driver’s license. Now we give them the opportunity to be part of the formal economy with this new law.” The governor recently announced he is planning to promote a bill that will allow immigrants to vote in island elections. Ag Chief Touts Coﬀee Incentives with Price Hike Still Under Review By MARIA MIRANDA SIERRA [email protected] A griculture Secretary Myrna Comas said earlier this week that she has yet to issue any declarations on a possible increase in the price of a pound of ground coﬀee and reiterated that the “Department of Consumer Aﬀairs [DACO by its Spanish acronym] is the entity that establishes the price and any possible hikes.” Comas, however, said the Agricultu- re Department did in fact conduct a study on costs throughout the entire chain of coﬀee production. Comas said her administration recently awarded $178,573 in incentives for Arabica coﬀee to some 260 farmers in the towns of San Germán, Yauco, Sabana Grande, in the Indiera sector of Maricao and Mayagüez. In 2014, $16 million was awarded in incentives to the coﬀee industry, she noted. “We continue to have much hope for 100% Puerto Rican Company Aguadilla • Caguas • Condado • Isla Verde Open 24 hrs EEnjoy njoy oy the Exp Experience perience ! the resurgence of the coﬀee industry,” Comas said on Wednesday. “Since the beginning of this administration we have taken on the task of strengthening the coﬀee industry, because we recognize its great socio-economic contribution. This industry employs more than 10,000 farm workers and aﬀects 21 municipalities, mainly in the central mountains.” For the past 16 months, the island Agriculture Department has awarded incentives to coﬀee growers, Comas said. Comas added that coﬀee growers also benefit from salary subsidies and bonuses for farm workers involved in the cultivation and harvesting of the product. “In addition, both coﬀee growers and pickers were awarded an incentive per load of harvested mature Arabica coﬀee, as a strategy to promote a higher quality of crop yield,” Comas said. “We are committed to improving the economic situation of our farmers and farm workers, fostering the growth of local production and reducing imports of this product while we generate jobs.” Earlier this week, Comas acknowledged that a pound of ground coﬀee will face a price increase even as she is seeking a way to mitigate or avoid the hike altogether. “There have been increases in costs in practically all farming expenses. … From that perspective, yes, you would have to say that there should be a [price] increase,” Comas said, adding that the costs of fertilizers, pesticides, labor and fuel, among other expenses, have all gone up. Observers have said that if coﬀee growers get their way, the price of a pound of ground coﬀee could rise as high as $5.93. “I will make sure the impact is minimal,” DACO Secretary Nery Adames said last December. The last time there was a hike in the price of ground coﬀee was March 2006, when it went up from $3.64 to $4.45 per pound. The San Juan Daily Star February 27-March 1, 2015 9 10 The San Juan Daily Star February 27-March 1, 2015 Puerto Rico Seeks Protection of Federal Bankruptcy Code P uerto Rico government oﬃcials sought Thursday to convince U.S. legislators that the island’s financially struggling public corporations should be allowed to restructure their debt under the federal bankruptcy code. The push comes weeks after a federal judge ruled that a local debtrestructuring law that Puerto Rico’s governor approved last year was unconstitutional. Melba Acosta, president of Puerto Rico’s Government Development Bank, was among those who testified before a U.S. House Judiciary Committee hearing in Washington, D.C. “The fiscal and economic situation in Puerto Rico has reached a critical moment,” she said. “If the public corporations default on their obligations and there is no clear legal regime, creditors may attempt to engage in a race to the courthouse.” Puerto Rico Resident Commissioner Pedro Pierluisi has filed a bill seeking to allow the island’s stateowned corporations to file for Chapter 9 if needed. It would not apply to debt issued directly by Puerto Rico’s government. The U.S. territory is in its eighth year of recession and is struggling to reduce $73 billion in public debt, with public corporations holding nearly 40 percent of that amount. Investors have grown increasingly concerned that the island’s Electric Energy Authority, which holds about $9 million in debt, could be one of the first to possibly go bankrupt. Moody’s Investors Service said in a report last week that Puerto Rico might default on its debt in the next two years. The island issued a record $3.5 billion in bonds last year to help generate more revenue, and it expects to soon issue $2 billion more, bac- ked by a proposed excise tax increase on crude oil. The revenue would help strengthen the finances of the Highway and Transportation Authority, which owes $2.2 billion to Puerto Rico’s Government Development Bank, about 21 percent of the bank’s portfolio. Acosta said that if the bill is not approved, it would make it more expensive for the government to borrow money and make it harder for public corporations to become selfsuﬃcient. Puerto Rico is currently the third-largest issuer of municipal bonds in the United States. Critics say the bill would aﬀect $48 billion worth of Puerto Rico municipal bonds and hurt bondholders. “Puerto Rican law already provides an alternative: receivership,” said Thomas Mayer, who represents funds managed by Franklin Municipal Bond Group and OppenheimerFunds, Inc. The two companies filed a lawsuit that led a federal judge to strike down the island’s debt-restructuring law this month. Bondholders Split on Merits of Chapter 9 for PR Agencies B ondholders are split on a proposed bill to give Puerto Rico’s ailing public agencies a way to restructure debt under U.S. bankruptcy law, with some saying it would give confidence to the market and others arguing it is a “Wild West” solution. The bill to give Puerto Rico’s agencies the ability to file under Chapter 9 of the U.S. bankruptcy code -- used by Detroit, Michigan, and Stockton, California -- was proposed by the U.S. territory’s representative to Congress, Democrat Pedro Pierluisi. It was heard on Thursday. “[It] would provide confidence to the municipal markets,” said Morrison & Foerster partner Anthony Princi, in a letter distributed by Pierluisi ahead of the hearing. Princi represents a group of 32 institutions holding more than $4.2 billion in Puerto Rico debt. FCO Advisors, an investment firm with exposure to Puerto Rico, said the consensus from numerous mutual funds, hedge funds and fi- nancial institutions was “that the approach is valid and merits consideration.” However, Thomas Mayer, a partner at Kramer Levin, who represents funds managed by Franklin Municipal Bond Group and OppenheimerFunds Inc in respect to their investment in $1.6 billion of Puerto Rico’s electric utility PREPA bonds, said use of Chapter 9 will cause more harm than good. PREPA is in dire shape, laden with about $9 billion in debt and already deep in restructuring negotiations with bondholders. Using Chapter 9 would force bondholders to shoulder the burden of PREPA’s operational failures and Puerto Rico’s fiscal irresponsibility, Mayer said. “Chapter 9 is the Wild West,” Mayer’s testimony said. “The only certainty is that Chapter 9 takes a long time -- at least 18 months to three years -- and is very expensive.” Pierluisi has argued that the bill would be in the best interests of all stakeholders, including creditors. “So far as I can tell, the opposition to this bill comes from a very small subset of investment firms,” said Pierluisi. “I hope that Congress will not allow such objections to frustrate forward movement on this widely supported bill.” Discussion about the bill was reignited when a federal court on Feb. 6 struck down a local law enacted by the Caribbean island granting agencies similar debt-restructuring authority. Puerto Rico’s Government Development Bank said Chapter 9 would be a “useful tool for Puerto Rico’s long-term economic success, whether or not it is actually invoked,” according to testimony from GDB President Melba Acosta.
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