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Captain Morgan Deal an Economic Turning Point, Governor Says

July 24, 2008 — The signing into law of a 30-year agreement between the government and beer, wine and spirits giant Diageo PLC for the construction of a new Captain Morgan rum distillery on St. Croix signals "an historic turning point in economic opportunities" for the territory's residents, Gov. John deJongh Jr. wrote Thursday.
In a letter sent Thursday to Senate President Usie R. Richards, deJongh said he had approved the agreement, which was ratified by senators during a session early last month. The agreement had to be in place by the end of July to allow for the issuance of up to $250 million in special-project bonds needed to finance the project and construction on the facility to start, Diageo and government representatives said during previous Senate meetings.
The agreement with Diageo will bring approximately $2.9 billion in new excise-tax revenues into the government's coffers throughout the life of the agreement, deJongh said Thursday. Rum production is expected to start in 2012, with the distillery producing an average of 20 million-proof gallons each year.
The agreement, deJongh has said, would "promote a greater measure of economic self-sufficiency and autonomy" for the territory by creating a new stream of excise-tax revenues that would help alleviate old government debts — including a more than $1.2 billion unfunded liability plaguing the Government Employees' Retirement System. (See "Senate to Act on Captain Morgan Deal in Special Session.")
The federal government currently collects $13.50 in excise taxes on each proof gallon of V.I. produced rum sold throughout the mainland. Of that amount, $13.25 is remitted to the V.I. government.
"I am proud to say that this legislation represents a collective effort of the executive branch and the Legislature," deJongh said in his letter to Richards. "It enjoys the overwhelming support of the community. I am proud of, and grateful for, the tremendous effort of all who worked to bring us to this point. I look forward to working with you and your colleagues in the coming months and years as we continue in our efforts to build the economy of the territory so that we can provide real opportunities for all of our people to prosper and progress."
Captain Morgan is the number two rum in the world, with sales of more than 7.5 million cases a year. Diageo, headquartered in the UK, owns Guinness, Johnny Walker, J&B, Smirnoff, Tanqueray and Jose Cuervo, in addition to Captain Morgan.
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