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HomeNewsArchivesRUM TAX 'COVER-OVER' EXTENDED 2 MORE YEARS

RUM TAX 'COVER-OVER' EXTENDED 2 MORE YEARS

March 11, 2002 – While weekend wire service and network stories touted the unemployment and tax benefits included in the Job Creation and Workers Assistance Act of 2002 signed by President Bush on Saturday, the new legislation is a boon to the Virgin Islands for another reason.
It extends the territory's return on federal taxes on the sale of Virgin Islands rum nationwide at the level of $13.25 per proof gallon until Jan. 1, 2004.
The rum tax "cover-over" at this level has been pumping nearly $75 million a year into the territory's coffers, most of which goes to cover payments for bonds. The U.S. House of Representative passed the bill on Thursday and the U.S. Senate followed suit on Friday.
The $13.25 rate had expired last Dec. 31, but the bill makes the extension retroactive to Jan. 1. Without the extension, the rate of return would have reverted to its previous level of $10.50 per proof gallon of rum made in the territory and sold in the States. Most of the rum is sold in bulk to companies that bottle it under their own labels for distribution.
The bill signed by Bush gives unemployed workers throughout the nation, including the Virgin Islands, an additional 13 weeks of federal unemployment benefits on top of the normal 26 weeks. The bill also includes tax benefits for businesses.
"This new law will provide tax incentives for companies to expand and create jobs by investing in plant and equipment," Bush said at a Rose Garden ceremony. "This measure will mean more job opportunities for workers in every part of our country, especially in manufacturing and in high tech and for those who work for small businesses."
The bill is projected to cost the federal government $42 billion over 10 years.
Delegate Donna Christian Christensen, who lobbied strongly to get the rum tax extension included in the economic recover bill, was at the White House Monday morning and could not be reached for comment.
For background, see earlier story, "Extending V.I. rum tax benefit wins House OK".

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