The government has used the layoffs and shutdown of public services to force through the first consumer sales tax in Puerto Ricos history. On May 4 the islands Senate voted to impose a 5.9 percent sales tax. As sugarcoating, it also approved a new tax on corporations with earnings of more than $10 million.
To protest the impending layoffs, many unions organized a march in San Juan on April 28 that drew 50,000. On May Day, several thousand people rallied in pouring rain, including contingents from the unions of electrical workers, teachers, and non-teaching university employees. In one incident reported by El Nuevo Día here, police clubbed protesters, two of whom received head wounds, one requiring medical attention. Protests have occurred since then throughout the island.
On May 9 the electrical workers union UTIER, the Teachers Federation of Puerto Rico, and other unions held a demonstration on the docks of San Juan, blocking access to a large cruise ship. In the cities of MayagŁez and Ponce, unionists held mass pickets at shopping malls.
Several other unions, however, postponed actions to wait for a promised resolution of the congressional deadlock on May 10. On that day a four-member commission is to present its plan to end the budget crisis. Its members include an economist, a former president of the islands Supreme Court, a former director of the governments budget office, and an assistant to the Senate president.
Both the governor and legislators have stated they will accept the commissions recommendations.
The current confrontation in Puerto Rico, a U.S. colony, is part of a longer-term effort by capitalists to solve the economic crisis through belt-tightening measures against working people. In recent months the government has increased utility rates, pressured many public employees to take early retirement, and imposed tuition hikes in the universities.
Puerto Ricos ruling parties, Acevedos pro-Commonwealth Popular Democrats (PPD) and the pro-statehood New Progressives (PNP), which currently dominates the legislature, have used the issue of the $740 million budget deficit as a club to demand further austerity measures. They have not agreed on a budget for the past two years.
The government claimed it would run out of money unless it adopted a sales tax. Acevedo called for a 7 percent tax, saying it was needed to obtain a loan to pay public employees wages through June 30, the end of the fiscal year. PNP legislators called for a 4 percent tax. Legislators from the smaller Puerto Rican Independence Party (PIP) opposed any sales tax.
To try to drum up support, the PPD organized a march by its supporters on April 20 arguing that failure to agree on a sales tax would mean denying workers their habichuelas (beans).
The Senate eventually approved a compromise proposal for a 5.9 percent tax, which Acevedo said he would support.
The government shutdown affected 43 agencies, including 45,000 teachers and 600,000 students. Thousands of residents were left without garbage collection and other services. Children who depend on subsidized school breakfasts and lunches had to find hot meals elsewhere.
Meanwhile, on May 8 Moodys bond rating agency lowered some of the Puerto Rican governments bonds to junk status, and others just a notch above it.
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