GLOBAL ECONOMY

Puerto Rico's Gov. García Padilla signs law raising sales tax to 11.5 pct

FILE - In this July 17, 2013 file photo, Puerto Rico’s Gov. Alejandro Garcia Padilla speaks during a news conference at the governor's executive mansion in San Juan, Puerto Rico. Garcia Padilla says he plans to boost the island's sluggish coffee industry by generating thousands new jobs and cultivating an additional 16,000 acres (6,400 hectares) in the next two years. (AP Photo/Ricardo Arduengo, File)

FILE - In this July 17, 2013 file photo, Puerto Rico’s Gov. Alejandro Garcia Padilla speaks during a news conference at the governor's executive mansion in San Juan, Puerto Rico. Garcia Padilla says he plans to boost the island's sluggish coffee industry by generating thousands new jobs and cultivating an additional 16,000 acres (6,400 hectares) in the next two years. (AP Photo/Ricardo Arduengo, File)  (A2013)

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 García 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 Suárez 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.

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