[Congressional Record Volume 145, Number 82 (Thursday, June 10, 1999)]
[Extensions of Remarks]
[Pages E1223-E1224]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      INTRODUCTION OF LEGISLATION

                                 ______
                                 

                          HON. PHILIP M. CRANE

                              of illinois

                    in the house of representatives

                        Thursday, June 10, 1999

  Mr. CRANE. Mr. Speaker, today I am introducing three bills which 
reflect my long-time interest in helping the economy and the people of 
Puerto Rico. Rather than spending taxpayer money on government 
programs, these bills will provide tax incentives for the private 
sector to help the economy of Puerto Rico.
  In 1996, Congress phased out Section 936 over my objections. As a 
result, the economic incentives for U.S. companies to do business in 
Puerto Rico have dwindled, negatively impacting the economy. In an 
effort to reverse that trend, the Government of Puerto Rico reduced 
their tax burden by 19 percent in recent years. However, they need more 
help. We in Congress can play an important role in that effort by 
putting in place long-term tax incentives to spur private sector growth 
on the Island.
  The first bill, the Puerto Rico Economic Activity Credit Improvement 
Act of 1999, will modify and extend the existing economic credit, which 
is due to expire at the end of 2005. My bill will build upon the 
replacement for Section 936, Section 30A, by extending the wage tax 
credit until the economy in Puerto Rico meets certain economic 
objectives designed to bring the Island up to a level more on par with 
the mainland. The credit will also be available to new companies 
locating in Puerto Rico. Companies already in Puerto Rico and utilizing 
the existing income credit will be given a one-time option to switch 
over to the wage credit before the termination date of the income 
credit.
  The second bill will make the research and development (R&D) tax 
credit available to companies operating in Puerto Rico. The R&D credit 
has never been accessible in Puerto Rico, but, until the demise of 
Section 936, the lack of an R&D credit was of little tax consequence to 
companies operating on the Island. My bill will provide this small, but 
important, tax credit for Puerto Rico and the other U.S. possessions as 
a matter of fairness.
  The third bill will repeal the limitation of the rum tax cover over. 
Under current law, a tax is collected on rum entering the U.S. mainland 
from Puerto Rico and the U.S. Virgin Islands. A portion of this tax is 
returned (covered over) to the governments of Puerto Rico and the 
Virgin Islands. Because of a dispute in 1984, the cover over was 
limited to $10.50 of the total $13.50 per gallon tax. My bill will 
restore

[[Page E1224]]

the cover over to the full amount. In particular, the government of the 
Virgin Islands desperately needs the revenue from the full cover over 
as they are currently in critical economic straits.
  In addition to restoring the cover over, this bill will also provide 
funding for the Conservation Trust Fund of Puerto Rico. The Fund has 
been very successful in preserving the natural resources of the Island 
for the people of Puerto Rico. In conjunction with the Governor of 
Puerto Rico and the U.S. Department of the Interior, we developed a 
plan to direct 50 cents of the per gallon rum tax to the Trust Fund for 
5 years. This funding would allow the Trust to finish building their 
endowment in order to fund their operations in perpetuity.
  I want to thank my colleagues who have lent their support in 
different ways to these proposals: Charlie Rangel, Carlos Romero-
Barcelo, Jerry Weller, Donna Christensen, Nancy Johnson, Phil English, 
J.D. Hayworth and Mark Foley. I urge the rest of my colleagues to 
support us in these efforts.

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