Earlier this week Puerto Rican newspaper El Nuevo Dia published a front-page story reporting the island is bankrupt.

According to the newspaper, Puerto Rico is currently $168 billion in debt and bankrupt. Previously the government had been misleading the people, making it appear the economic situation was better than the actuality.

The publication also called out Gov. Alejandro Garcia Padilla for his absence in addressing the press and public.

Gubernatorial secretary Victor Suarez said, however, that the governor hasn't been purposely avoiding the press but rather has been focusing his attention on developing a tax reform plan.

The Puerto Rican government has hired consulting firm, KPMG, for $4.7 million to analyze the island's finances. So far the reform plan includes imposing a 16 percent tax on goods and services. Taxpayers earning less than $21,800 a year won't see any taxes taken from their paycheck.

If the tax proposal is adopted, it will leave 800,000 taxpayers exempt from income tax.

"This is one of the most important measures in Puerto Rico in 20 years," said Rafael Hernandez Montanez, chairman of the finance committee of the lower house.

He added the plan works to stem tax evasion involving "at least half a million people who do business under the table."

The island's population stands at 3.5 million with only 1 million people filing tax returns.

Finance secretary Juan Zaragoza held a number of interviews with media and said the KPMG report was technical and officials wanted to wait until the bill was introduced to Legislature before releasing any more details.

The reform already received criticism form the main opposition, New Progressive Party.

The governor has until Feb. 15 to present the tax reform bill to the Legislature.

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