48 U.S. Code § 745 - Tax exempt bonds
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All bonds issued by the Government of Puerto Rico, or by its authority, shall be exempt from taxation by the Government of the United States, or by the Government of Puerto Rico or of any political or municipal subdivision thereof, or by any State, Territory, or possession, or by any county, municipality, or other municipal subdivision of any State, Territory, or possession of the United States, or by the District of Columbia.
Source(Mar. 2, 1917, ch. 145, § 3,39 Stat. 953; Feb. 3, 1921, ch. 34, § 2,41 Stat. 1096; Mar. 4, 1927, ch. 503, § 1,44 Stat. 1418; Aug. 26, 1937, ch. 831, 50 Stat. 844; Aug. 17, 1950, ch. 731, 64 Stat. 458; Pub. L. 87–121, § 1,Aug. 3, 1961, 75 Stat. 245.)
Section is comprised of second part of section 3 of act Mar. 2, 1917, commencing with proviso clause. The first and last parts of section 3 are classified to sections 741 and 741a, respectively, of this title.
Provisions similar to those in this section were contained in act Apr. 12, 1900, ch. 191, § 38,31 Stat. 86.
1961—Pub. L. 87–121struck out “no public indebtedness of Puerto Rico and the municipalities of San Juan, Ponce, Arecibo, Rio Pledras, and Mayaguez shall be allowed in excess of 10 per centum of the aggregate tax valuation of its property, and no public indebtedness of any other subdivision or municipality of Puerto Rico shall hereafter be allowed in excess of 5 per centum of the aggregate tax valuation of the property in any such subdivision or municipality,” before “All bonds issued” and also struck out “In computing the indebtedness of the people of Puerto Rico, municipal bonds for the payment of interest and principal of which the good faith of the people of Puerto Rico has heretofore been pledged and bonds issued by the people of Puerto Rico secured by bonds to an equivalent amount of bonds of municipal corporations or school boards of Puerto Rico shall not be counted but all bonds hereafter issued by any municipality or subdivision within the 5 per centum hereby authorized for which the good faith of the people of Puerto Rico is pledged shall be counted” after “District of Columbia”.
1950—Act Aug. 17, 1950, made section applicable to municipalities of Arecibo and Rio Piedras.
1937—Act Aug. 26, 1937, made section applicable to municipality of Mayaguez and substituted “August 26, 1937” for “March 4, 1927” wherever appearing.
1927—Act Mar. 4, 1927, made section applicable to municipalities of San Juan and Ponce, limited public indebtedness of other subdivisions or municipalities of Puerto Rico to 5 per centum, and inserted in last sentence two clauses, the first relating to the non-inclusion of municipal bonds for the payment of interest and principal, and the second reading “but all bonds after August 26, 1937, issued by any municipality or subdivision within the 5 per centum authorized for which the good faith of the people of Porto Rico is pledged shall be counted.”
1921—Act Feb. 3, 1921, increased allowable public indebtedness from 7 to 10 per centum of aggregate tax valuation of property.
Effective Date of 1961 Amendment
Pub. L. 87–121, § 2,Aug. 3, 1961, 75 Stat. 245, provided that: “Section 1 of this Act [amending this section] shall take effect upon a majority of the qualified electors of Puerto Rico having voted in a referendum pursuant to section 1 of article VII of the constitution of the Commonwealth of Puerto Rico, to include provisions in the Commonwealth constitution, in lieu of the provisions of section 3 of the Puerto Rican Federal Relations Act [this section] specified herein, limiting the debt-incurring capacity of the Commonwealth and of its municipalities (as proposed in the concurrent resolution of the legislative assembly of the Commonwealth).”
[Referendum held Dec. 10, 1961, and debt limitation amendment to Article VI, § 2, of Constitution of Commonwealth of Puerto Rico ratified by a majority of voters.]