Legislation that would restore tax incentives for physicians in Puerto Rico is moving through the Legislature, but concerns over a projected $505.4 million hit to the General Fund over five years remain a central obstacle.
During a public hearing before the House Economic Development Commission, representatives of several government agencies, medical groups and academic institutions voiced support for Senate Bill 15, which would restore a 15-year tax exemption for qualified physicians and set a preferential income tax rate of 12%.
However, officials from the Puerto Rico Fiscal Agency and Financial Advisory Authority warned that the proposal must be reviewed carefully to ensure compliance with the certified fiscal plan.
“The available fiscal analysis reflects a fiscal impact on the General Fund in the projected fiscal years, which requires a careful evaluation of consistency with the certified Fiscal Plan, the balanced budget, and the principle of fiscal neutrality,” said Luis Rivera, director of intergovernmental affairs at the agency.
According to the Office of Legislative Services and Budget, the measure would reduce government revenue by more than half a billion dollars over the next five years, prompting lawmakers to look for ways to offset the cost.
Commission Chairman Joel Franqui-Atiles suggested redirecting incentives from programs with lower local production to help fund the proposed medical decrees and asked the Department of Economic Development and Commerce (DDEC in Spanish) to identify at least five incentives that could be reassigned.
“We all agree that we need to find ways to incentivize doctors to stay here in Puerto Rico. The incentive works. What we need to ensure is that it’s neutral, which is what the Fiscal Oversight Board is asking for,” Franqui said.
Health Secretary Víctor Ramos backed the measure, calling the incentive necessary to address the shortage of physicians, though he acknowledged that tax benefits alone will not solve the problem.
“The measure balances the state’s fiscal responsibility with the public interest in guaranteeing adequate access to health services,” Ramos said, adding that licensing, credentialing and federal funding issues must also be addressed.
Medical groups also endorsed the bill, arguing that the incentive should be tied to clinical practice and continued service on the island. Roberto Pérez, president of the Board of Medical Licensure and Discipline, said the proposal aligns tax policy with the need to increase access to health services and strengthen the health system’s workforce.
The Puerto Rico Society of Orthopedics and Traumatology said retaining newly trained specialists is urgent, noting that the island has 117 active orthopedic surgeons, most of whom practice subspecialties. The University of Puerto Rico Medical Sciences Campus also recommended considering a lower tax rate for faculty physicians to help narrow the competitive gap with other jurisdictions.
The DDEC supported the measure but said lawmakers must identify a funding source before approving new tax decrees. Franqui said he expects to issue a positive report and bring the bill up for consideration during the current legislative session.
SOURCE: News is my Business
