May 09, 2006

Government Shuts Down in Puerto Rico

The government in Peurto Rico, a US territory, has shut down all government operated schools and offices except the essential government ones. As expected, the effect is huge, almost 100,000 people are jobless and 500,000 students suddenly have no school.

The problem arose because the government could not agree on a budget with the congress due to the $740m (Rs 33,300 crores) shortfall in public funds. The government pays almost $500m in salaries being the biggest employer. The legislators blame the governer, who blames "legislative inaction" for the crisis. The government is now using the 2004 budget since there has been no agreement since the last year.

Governer Aníbal Acevedo Víla, wants to implement a 7% sales tax to pay off the deficit, but most of the legislators do not want anything more than 5.5%. Currently there is no sales tax. Puerto Ricans do not pay the US Income tax, but the islands receive federal funds.

Even the political status of Peurto Rico isn't quite clear. Recently it was questioned in the White House. (Peurto Rico is a commonwealth, but president Bush is the head of the state.) The opinion on the island is divided between complete independence, becoming the 51st US state and maintaining the current position. In a nation wide survey in 1998, only 2.5% wanted complete freedom.