The Centro Unido de Detallistas (CUD), Puerto Rico’s retailers and small-business organization, is calling for a six-month moratorium on the island’s fuel tax, known as the "crudita," as businesses and consumers face higher electricity costs this quarter. CUD President Alan Taveras said the temporary suspension would give immediate relief to small and midsize businesses absorbing a new increase in electricity rates.
If the business absorbs the increase, it loses capacity to invest, hire and grow. If it passes it on, the consumer ultimately pays,
The organization has previously called for a substantial reduction of the tax and ultimately its elimination. "We have a situation that requires immediate action," Taveras said. "If our small and midsize businesses are going to face a significant increase in electricity costs, we have to look for ways to relieve other burdens that directly affect their operations."
According to an analysis by Inteligencia Económica cited by the CUD, an increase of 5.28 cents per kilowatt-hour approved for October through December will generate approximately $218 million in additional costs across Puerto Rico’s economy during the quarter. For a typical small or midsize business, the increase is estimated to mean a roughly 17% jump in its electricity bill.
The analysis estimates that retailers, manufacturers and farms will face approximately $122.5 million in additional costs during the quarter. Businesses could absorb part of the increase through lower profit margins or pass some of it to consumers through higher prices. "If the business absorbs the increase, it loses capacity to invest, hire and grow. If it passes it on, the consumer ultimately pays," Taveras said.