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Charlotte Amalie
Sunday, July 21, 2024
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Rum Tax Rebate Explained

Dear Source:
"The federal government returns to the territorial government $13.25 for each proof gallon of rum produced in the territory and sold in the United States. Rum buyers pay $13.50 in federal taxes."
Nope. The federal government covers-over (gives) $13.25 for every proof gallon of rum products imported by the United States from anywhere in the world to the treasuries of Puerto Rico and the Virgin Islands. Currently, about 14 percent of the total cover over goes to the VI and 86 percent to Puerto Rico. The formula is based on the percentage of the total amount of rum shipped to the US from the two territories. Since the new distillery will double the amount shipped from the VI and cut the amount shipped by PR (as a percentage of worldwide rum import taxes), the VI will increase its share to more than 40 percent. It is not a refund of anything. Please see Section 26.31 of the United States Code 7652.

Bob Hoffman
Christiansted, St.Croix

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