Puerto Rico's governor has signed into law a bill increasing the U.S. territory's sales tax from 7 percent to 11.5 percent. It is scheduled to go into effect July 1.

The law signed by Gov. Alejandro Garcia Padilla on Friday night also calls for a new 4 percent tax on professional services that will go into effect later this year.

The taxes are expected to generate up to $1.2 billion in revenue.

Gubernatorial Chief of Staff Victor Suarez said in a statement that the new law will help relieve the dire fiscal situation of Puerto Rico's government. The U.S. island is struggling with $72 billion in public debt amid a nearly decade-long economic slump.

Legislators are now debating a proposed $9.8 billion budget that calls for $674 million in cuts.