Saturday, February 6, 2016
New York Times, Walmart Sues Puerto Rico, Claiming an Unfair and Onerous Tax Burden:
The last thing Puerto Rico would seem to need is another fight about money.
But the island’s government, already facing multiple battles over billions of dollars in debt, was in yet another courtroom on Wednesday, locked in a legal dispute with its biggest sales-tax collector and its biggest private employer — the mighty retailer Walmart.
This time the dispute is not about bond payments, but taxes: the taxes that Puerto Rico is charging Walmart for the goods it brings from its distributors off the island — including in the United States — to sell in its stores in Puerto Rico.
In May, the island raised the special tax on those goods to 6.5 percent from 2 percent for the largest retailers. Walmart filed suit in December, saying the increase left it with an effective income tax of 91.5 percent.
The tax “sentences Walmart in Puerto Rico to death, for a crime there is no evidence it committed,” Walmart’s lawyer, Neal S. Manne, told the court. “No business can operate for long in an environment where 91.5 percent of its net income is confiscated through taxes,” the company said in its complaint.
Walmart argues that the tax is illegal — a violation of both the Commerce Clause and the Equal Protection Clause of the United States Constitution. Walmart says it was singled out for the tax increase and is the only entity in Puerto Rico subject to such a high tax burden.