What is Puerto Rico’s Location and Demography?

What is Puerto Rico’s relationship to the United States?

Puerto Rico came under United States sovereignty pursuant to the Treaty of Paris, signed on December 10, 1898, which ended the Spanish-American War.  Puerto Ricans have been citizens of the United States since 1917.  In 1950, after a long evolution toward greater self-government for Puerto Rico, the Congress of the United States enacted Public Law 600, which is “in the nature of a compact” and which became effective upon its acceptance by the electorate of Puerto Rico.  It provides that those sections of existing law which defined the political, economic, and fiscal relationship between Puerto Rico and the United States would remain in full force. 

The United States and the Government of Puerto Rico share a common defense, market, and currency.  The Government exercises virtually the same control over its internal affairs as do the 50 states.  It differs from the states, however, in its relationship with the federal government.  The people of Puerto Rico are citizens of the United States but do not vote in national elections.  They are represented in Congress by a Resident Commissioner who has a voice in the House of Representatives but no vote.  Most federal taxes, except those such as Social Security taxes which are imposed by mutual consent, are not levied in Puerto Rico.  No federal income tax is collected from Puerto Rico residents on income earned in Puerto Rico, except for certain federal employees who are subject to taxes on their salaries. The official languages of Puerto Rico are Spanish and English.

What is the Government Development Bank for Puerto Rico?

The Government Development Bank for Puerto Rico (“GDB”) serves as bank, fiscal agent and financial advisor for the Government of Puerto Rico, and its instrumentalities.  GDB was founded in 1942 and plays a key role as fiscal agent and financial advisor to the Government in addition to helping finance Puerto Rico’s economic infrastructure projects.  Additional information available at www.gdbpr.com.

What is the Puerto Rico Sales Tax Corporation?

The Puerto Rico Sales Tax Corporation (the ‘Corporation’) is an independent instrumentality of the Government of Puerto Rico created under Act No. 91 of the Legislative Assembly since amended.  The Corporation is authorized to issue bonds for the purpose of financing, among other items, the repayment or defeasance of the Government’s appropriation debt obligations and certain other Government debt without defined repayment source, the Government’s economic stimulus package, and operational expenses of the Government for fiscal years 2008-09, 2009-10, and 2010-11.  Government law empowers the Corporation to receive the first receipt of the Government’s 5.5% sales tax in any fiscal year up to its dedicated portion, which is the greater of a fixed amount and 50% of the sales taxes.  The sales taxes received by the Corporation are applied to the payment of its debt obligations and other authorized purposes.  The Corporation’s board consists of the Board of Directors of GDB.

What revenue sources does the Puerto Rico Sales Tax Corporation use to make payment on the Sales Tax Revenue Bond?