[Congressional Record Volume 147, Number 127 (Wednesday, September 26, 2001)]
[Senate]
[Pages S9881-S9882]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BREAUX (for himself and Mr. Hatch):
  S. 1475. A bill to amend the Internal Revenue Code of 1986 to provide 
an appropriate and permanent tax structure for investments in the 
Commonwealth of Puerto Rico and the possessions of the United States, 
and for other purposes; to the Committee on Finance.
  Mr. BREAUX. Mr. President, I am proud to be an original co-sponsor of 
the Economic Revitalization Tax Act of 2001. This legislation is 
designed to revitalize one of America's most important economic 
partners. As we discuss economic stimulus measures for our Nation 
during these difficult times, it is important the we do not leave 
behind the 3.9 million U.S. citizens of the Commonwealth of Puerto 
Rico.
  Puerto Rico purchases over $16 billion a year in goods and services 
from the rest of the United States. This is more than much larger 
nations such as Russia, China, Italy and Brazil. A strong economy in 
Puerto Rico helps generate over 320,000 jobs in the U.S. mainland. It 
is important that we maintain this economic partnership as strong as 
ever.
  The economy of Puerto Rico was weak even before the current national 
crisis. Since the beginning of the year, plant closures have been 
announced affecting over 7 percent of the manufacturing workforce. 
Since Congress repealed tax incentives for investment in Puerto Rico in 
October 1996, manufacturing employment has declined by over 15 
percent--more than any state in the U.S. mainland. Employment in other 
sectors of the economy has not increased enough to offset the loss in 
manufacturing jobs. Consequently, total employment in Puerto Rico has 
declined over the last five years. By contrast, during the same period, 
jobs increased by over 10 percent in the average state, and no state 
experienced a net job loss.
  The negative economic impacts of the current state of national alert 
will be felt most in those regions of the country that are dependent on 
tourism and air transportation. As a small island, Puerto Rico is four 
times more dependent on external trade as a share of GDP than the U.S. 
mainland, and 45 percent of Puerto Rico's trade is transported by air, 
compared to only 5 percent for the U.S. American Airlines which employs 
thousands at its major hub in Puerto Rico will be dramatically affected 
by the reduction in air travel.
  Tourist expenditures are an essential component of Puerto Rico's 
economy.

[[Page S9882]]

Occupancy rates at Puerto Rico hotels have already been cut in half, 
with more losses expected as convention cancellations mount. Absent a 
turnaround, a significant portion of Puerto Rico's economy is directly 
at risk, with ripple effects beyond the tourism sector.
  Puerto Rico's economy is closely linked to the U.S. economy. When the 
United States goes into recession, the impact is immediately felt on 
the Island where the rate of unemployment currently is running at about 
13 percent. Retail sales are down over 30 percent since the terrorist 
acts.
  It is essential to adopt measures to help Puerto Rico, like the rest 
of the country, recover economically and financially. Proposed national 
economic recovery legislation will not, without special provisions, 
help Puerto Rico. For example, because Puerto Rico is considered a 
separate taxing jurisdiction, investment tax credits and other business 
incentives do not apply to investments in Puerto Rico.
  ``The Economic Revitalization Tax Act of 2001,'' will materially 
assist in mitigating the impact of the expected economic losses in 
Puerto Rico as a result of the tragic recent events, as well as halt 
the continuing loss of manufacturing jobs due to the 1996 repeal of 
U.S. tax incentives. This legislation would provide a new tax regime to 
encourage American companies to retain their Puerto Rico operations and 
to re-invest profits earned in Puerto Rico and the U.S. possessions in 
the United States on a tax preferred basis. This will not only help 
Puerto Rico directly, but it will also help the American economy by 
returning profits to the U.S. where they can be invested in other job 
creating activities.
  Puerto Rico is a vital partner in the American family. The new 
administration of Governor Sila Maria Calderon, is bringing a renewed 
vision of a prosperous Puerto Rico and is implementing a coherent 
development plan that will make that vision a reality. Governor 
Calderon understands that reform of the Commonwealth government and its 
economic development policies are necessary for Puerto Rico's economic 
development. She is doing this in close collaboration with business and 
community leaders in Puerto Rico.
  This proposal is a win-win situation for Puerto Rico and for the 
American worker and taxpayer. We help create jobs in Puerto Rico, and 
those jobs will help create jobs in the U.S. mainland.
  Please join me in supporting this legislation.

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