A bill to ensure the Virgin Islands continues to receive rum tax rebates from the federal government, at the rate local government officials anticipated when inking deals with two major rum manufacturers, was signed into law.
President Barack Obama signed the sweeping $858 billion Tax Cuts and Unemployment Benefits package, which contains a tiny provision that keeps rum tax rebates flowing to the territory at a $13.25 per proof gallon rate through next year.
“I am very pleased that our rum tax extension is safe despite an 18-month campaign to derail legally binding agreements which stand to benefit the Virgin Islands,” V.I. Delegate to Congress Donna Christensen. “The rum tax extension covers 2010 retroactively and covers through the end of 2011.”
Gov. John deJongh Jr traveled to Washington several times to lobby for the extension and fend off attempts by “Puerto Rico-allied interests” to derail the deals he had negotiated with Diageo PLC and Cruzan VIRIL.
The provision ensures that for every proof gallon of Virgin Islands-produced rum exported to the U.S. mainland, the federal government will return to the territory $13.25 of the $13.50 in excise taxes the federal government collects from the rum manufacturer.
Christensen said in the release that passage of the tax extension is good for the economy of both Puerto Rico and the Virgin Islands. Keeping the rum tax rebate at the $13.25 level, instead of $10.50, means an additional $80 million in revenue to Puerto Rico and an additional $20 million in revenue to the Virgin Islands annually, according to the release. Those figures are based on past years’ rum production levels.