In order to preserve the status of its only investment grade bond and reduce its outstanding debt, Puerto Rico has increased its sales tax rate and stepped up tax enforcement. Tax is a logical place to begin repairing the territory’s credit status because taxes can reduce Puerto Rico’s ratio of debt to revenue. Additionally, sales tax is a key to bond sales in Puerto Rico. The only Puerto Rican bond to retain an investment grade rating is the Cofina bond, whose revenue is backed by sales tax.
Recent legislation attempts to fight these problems by increasin
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