Bills Returning Federal Rum Taxes to V.I. Need Work

Sept. 27, 2008 — The U.S. House of Representatives Friday passed a bill extending the return of nearly all the federal tax paid on V.I.-produced rum sold on the mainland to the territory. The U.S. Senate passed its version of the bill Tuesday, but differences in the two bills mean that an agreement between the two bodies must be reached. (See: "U.S. Senate Votes to Extend Rum-Tax Formula Two Years.")
The final bill will be retroactive to January when the previous extension expired.
"We had hoped for an agreement, but the House bill is different from the bill that the Senate passed on Tuesday night," Delegate Donna M. Christensen said in a statement issued Friday. "We are optimistic that because of the importance to the national economy of the other provisions, such as the solar energy tax credit, that both houses of Congress will come to an agreement in a conference committee on a single bill before the Congress adjourns."
The bill extends the return of the rum tax to the territory for two years. The territory receives $13.25 of the $13.50 tax paid on a proof gallon of rum.
Without the extension, the territory would receive only $10.50 per proof gallon. Since 1999, the U.S. Congress has granted extensions that keeps the figure at $13.25.
Gov. John deJongh Jr. said in a Wednesday press release that receiving the additional $2.75 per proof gallon is worth an additional $20 million a year for the territory. He said the territory gets about $80 million a year from the rum tax.
The $80 million a year is expected to more than double when construction of the new Diageo distillery on St. Croix is completed in 2012.
Christensen could not be reached for comment Saturday. Lorelei Monsanto, who runs Christensen's St. John office, said the delegate was in Washington, D.C. attending meetings related to the economic bail out bill.
The House version of the bill is part of the Renewable Energy and Job Creation Tax Act of 2008.
On Wednesday, deJongh said that the measure had been held up for over a year as a result of a long-standing dispute between Republicans and Democrats over the issue of whether the tax “extender” provisions had to be off-set with other tax increases or spending cuts under Congressional budget rules.

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