Next year, the economy is expected to contract by as much as 2 percent as Puerto Rico remains burdened by $69 billion in public debt and an unemployment rate of 13.9 percent, higher than any U.S. state.
"It's like a Catch-22," Velez said. "The big question is whether the economy is capable of absorbing the impact of these taxes. .... It's a question we cannot yet answer."
Some critics say the island's public spending is the problem.
The new business tax was enacted "to maintain a level of government spending that Puerto Rico's economy cannot sustain," said Priscilla Vazquez, spokeswoman for the Manufacturers Association of Puerto Rico, which is requesting a moratorium on the tax.
Tens of thousands of Puerto Ricans have already left the island for better opportunities elsewhere, including Olivo's two sons who sought new jobs in the U.S. Olivo said he is too old to start a new life with them, noting he's still paying a $750 monthly mortgage and tuition costs with the help from his wife, a social worker.
Meanwhile, Olivo's monthly water bill has more than doubled from $70 to $150, and gas prices have spiked following an increase in taxes on each barrel of crude oil from $3 to $9.25. He's adjusted by spending more time at home or walking instead of driving. If forced to use the car, Olivo buys only a few gallons (liters) at a time. He said three years have passed since he last bought any personal items for himself.
"Those increases have been a disaster," he said. "I can't afford to live in Catano now on Social Security alone. ... I used to make more than $80,000 a year. To go from $80,000 to $0, imagine that."
Such reactions prompted Treasury Secretary Melba Acosta to delay a portion of the oil tax increase in mid-August to give officials time to study its impact on prices, while the state water and sewage company has made concessions to help lower water bills for certain commercial and private consumers. As it stands, residential clients who use up to 35 cubic meters of water a month are paying almost double now. Some commercial clients have seen their bill go up by several thousands of dollars.