Esta ley enmienda la Ley Núm. 135 de 9 de mayo de 1945 para extender exenciones contributivas totales a personas naturales o jurídicas dedicadas al transporte aéreo de pasajeros como transportistas públicos. La ley busca incentivar la industria del transporte aéreo en Puerto Rico, afectada por recesiones económicas y eventos como los ataques del 11 de septiembre de 2001, para mantener a la isla como un centro de transporte aéreo y estabilizar el empleo en el sector.
(Approved September 2, 2004)
To amend subsections
(a) and
(d) and to add a subsection
(f) to Section 1 of Act No. 135 of May 9, 1945, as amended, to extend total tax exemptions to any natural or juridical person engaged as public carrier in the passenger air transportation business.
Joint Resolution No. 18 of April 17, 1932, extended certain economic incentives that made viable the development of the Isla Grande Airport. Later, in 1945, the Legislature set the goal of creating an air transportation center in Puerto Rico. Act No. 135 of May 9, 1945, which granted some Commonwealth and municipal excise and property tax to air transportation service carriers, was approved for such purposes. This measure prompted the creation of the Luis Muñoz Marín International Airport. In 1959, Act No. 135 of May 9, 1945, was amended to exclude aviation fuel from exemption. In 1966, Act No. 135 was amended again to exclude from exemption the duties that may be imposed by the Ports Authority pursuant to Act No. 82 of June 25, 1959.
To mitigate the effects of the 1979 recession and to boost tourism and strengthen the air transportation industry when the recession was worsening, the Legislature amended Act No. 135 in 1980 to exempt public air transportation carriers whose ten-year tax exemption had ended, from the payment of taxes on property, airplanes, and any replacement parts they used.
In 1986, the Legislature once again decided to extend the mission of the
International Airport by incorporating as public policy the commitment to "turn the Island into the hub of industrial and economic development in the Caribbean Basin." It did so through Act No. 66 of July 3, 1986, which extended the tax exemptions of Act No. 135 by additional ten-year terms to carriers that would substantially expand their operations in Puerto Rico at that time.
These measures have greatly contributed toward the success of the Luis Muñoz Marín International Airport and stimulated private investments in this important sector of our economy. However, the industry has suffered greatly by the fall of the securities markets, the economic recession in the United States, followed by the unfortunate terrorist attacks of September 11, 2001. The industry needs new incentives at this juncture, since it has not yet been able to recover. In fiscal year 2002, according to Planning Board numbers, a cutback of 464 thousand tourists was registered. Due to this cutback, the number of tourists fell to levels unseen since 1994. Furthermore, personal consumer expenses of Puerto Ricans for traveling abroad were reduced by almost ten (10) percent.
On a previous occasion, this Legislature had already acknowledged the crisis caused by the September 11, 2001 terrorist attacks and approved a measure for the airlines (Act No. 173 of December 7, 2001), which reduced the excise tax on airline fuel for three (3) months. However, the current economic realities, the recent increases in the price of airline fuel, the war in Iraq, the high cost of insurance and the costs imposed by the federal government weigh heavily and have worsened the economic crisis of the air transportation industry. Two main airlines, United Airlines and US Airways are already operating under the protection of the Federal Bankruptcy Laws, while other airlines are taking extraordinary measures to reduce their costs. In certain markets, the industry has reduced the number of flights due to diminished demand or earnings, and throughout the system, they have reduced more than 98,000 employment positions since the 2001 terrorist
attacks. This Legislature understands that Puerto Rico should maintain its position as a prime international air transport hub for the Caribbean. Therefore, the tax burden should be reduced for commercial airlines in Puerto Rico to attract, broaden and maintain the viability of the air transport industry and stabilize the number of employment positions, as well as to promote their operations in Puerto Rico, thus avoiding a crisis that would place at risk thousands of employment positions in said industry, in the tourism industry and in other sectors of our economy.
Section 1.-A paragraph is hereby added at the end of subsection
(a) of Section 1 of Act No. 135 of May 9, 1945, as amended, to read as follows: "(a)...
In addition, contractors and subcontractors of public air transportation service carriers shall be exempted from the payment of any tax, levy, duty, license, excise tax, rate or fee imposed by any municipal ordinance on the construction of works to be used by such public carriers within a municipality, without it being understood that said taxes include the municipal license tax imposed on the volume of business of the contractor or subcontractor of the public carriers, during the term authorized for the exemption.
(b) ..."
Section 2.-Subsection
(d) of Section 1 of Act No. 135 of May 9, 1945, as amended, is hereby amended to read as follows: "(d) Those public carriers engaged in air transportation who have exhausted their tax exemption term under the provisions of this Act shall be entitled to a personal property tax exemption on property related to airplanes and spare parts owned by public carriers for the exclusive use on airplanes owned or leased and on
the equipment, parts, materials and ramp supplies.
(e) ...'
Section 3.-A subsection
(f) is hereby added to Section 1 of Act No. 135 of May 9,1945 , as amended, to read as follows: "(f) Any natural or juridical persons engaged as public carriers in the air transportation business who as of January 1, 2002, were benefiting from the tax exemption set forth in subsections
(a) or
(e) of this Section may continue to benefit from the tax exemption set forth in subsection
(a) for an additional term of ten (10) years from the approval of this amendment on any personal or real property owned or acquired to be used in the air transportation business. Those natural or juridical persons who were enjoying the benefits of this Act as of January 1, 2002, but whose benefits expired prior to the approval of this amendment may enjoy the benefits of the additional term of ten (10) years of tax exemption starting from the expiration of their previous term of tax exemption. Those natural or juridical persons who desire to avail themselves of the benefits of this amendment shall file an election with the Department of Economic Development and Commerce within one hundred eighty (180) days after the approval of this amendment in which they commit themselves to maintain operations in Puerto Rico and to comply with an employment requirement of not less than seventy-five (75) percent of their average employment in calendar year 2002, provided that the Secretary of the Department of Economic Development and Commerce may modify, for a term of not more than eighteen (18) months, said employment requirement, taking into account the particular circumstances of the airline industry and other factors that adversely affect said industry, such as variations in the seasonal demand, weather conditions, strikes or labor situations or other acts beyond the control of the airline.
Those natural or juridical persons who wish to avail themselves of the benefits of this amendment shall accompany the election described in the previous paragraph with a certification from the Executive Director of the Ports Authority stating that they are engaged as public carriers in the air transportation business in Puerto Rico."
Section 5.-Effectiveness This Act shall take effect immediately after its approval.
I hereby certify to the Secretary of State that the following Act No. 240 (H.B. 4333) of the $7^{ ext {th }}$ Session of the $14^{ ext {th }}$ Legislature of Puerto Rico:
AN ACT to amend subsections
(a) and
(d) and to add a subsection
(f) to Section 1 of Act No. 135 of May 9, 1945, as amended, to extend total tax exemptions to any natural or juridical person engaged as public carrier in the passenger air transportation business, has been translated from Spanish to English and that the English version is correct.
In San Juan, Puerto Rico, today $13^{ ext {th }}$ of February of 2007.
Francisco J. Domenech Director