Posted on 11/18/2009 12:12:16 PM PST by Ebenezer
The bad blood continues to ferment between Puerto Rico and the U.S. Virgin Islands over rum taxes, as the two territories vie for perks to lure the lucrative industry.
In the latest round, the U.S. Virgin Islands is accusing Puerto Rico and its backers of spreading “misinformation” related to a recent move by liquor company Diageo to open a rum plant in the Virgin Islands. Diageo, which owns Captain Morgan, is ending a long-standing relationship with Puerto Rico’s Destilería Serrallés.
In a Nov. 13 letter to House Ways and Means Chairman Charlie Rangel (D-N.Y.), Gov. John deJongh of the Virgin Islands blasted previous communiqués from the Puerto Rican side, namely a letter from Puerto Rico Resident Commissioner Pedro Pierluisi (D).
“I feel compelled to correct the record on misinformation in the letter,” deJongh wrote.
According to deJongh, the “USVI did not lure Diageo away from Puerto Rico.” Instead, he wrote, Puerto Rico was unable to renew a contract with Diageo. An official with the Puerto Rico Federal Affairs Administration did not return a call seeking comment.
Pierluisi has sponsored a bill in Congress that would impose a new cap on the tax revenue that the territories can use to attract rum companies as part of the rum tax “cover over” program. Pierluisi’s bill would consider anything more than 10 percent of the islands’ rum rebate an “unreasonable” subsidy.
But the Virgin Islands’ side argues that Pierluisi’s idea is a bad proposal.
“Under this bill, any excise tax generated by the production of Diageo for Captain Morgan, would go not to the VI government, but to Puerto Rico,” said Peter Hiebert, a partner at Winston & Strawn, who represents the government of the U.S. Virgin Islands. “The self-interest of the proponents of this bill is apparent on its face. The bill would radically transform the nature of the cover-over statute, which forms one of the foundations of the tax relationship between the United States and its territories, for the first time in nearly 100 years.”
In a Nov. 10 letter, Pierluisi and his supporters wrote to Rangel that the Captain Morgan move could cost Puerto Rico as much as $6 billion over 30 years. “This includes the loss of at least 320 rum production jobs,” he wrote.
Pierluisi has said that Puerto Rico uses about 6 percent of its federal rum tax cover-over program money to woo liquor interests, while it uses the vast majority on general economic development programs. “The purpose of the cover-over program is, and has always been, to help the two territories provide for the general welfare of their residents and to promote broad-based economic development,” Pierluisi said in a press statement when he introduced his bill this spring.
But in the USVI governor’s recent letter, deJongh argued that “the campaign to curtail the USVI’s economic development initiatives sets a dangerous precedent for federal involvement in matters between local and state governments and companies. I am not aware of Congress interjecting itself to forbid one state’s economic development initiative or to require off-setting subsidies as compensation.”
That message seems to resonate with Rangel. A Ways and Means spokesman said in an e-mail: “This is an issue for the territories and companies to resolve. The only issue pending before Congress is the extension of current law and I expect that issue will be dealt with in the coming months.”
Even so, neither side appears ready to stand down. Puerto Rico and the U.S. Virgin Islands both spend heavily on K Street. So far this year, Puerto Rico has shelled out more than $800,000 to three lobbying firms: Bryan Cave, Covington & Burling and DLA Piper. The U.S. Virgin Islands this year has spent about $850,000 at Winston & Strawn and Callwood Associates.
“We plan to continue our education efforts to shed light on the misinformation spread by Puerto Rican allies, including the false notion that the USVI lured Diageo from Puerto Rico,” Louis Penn, deJongh’s chief of staff, said in a written statement. “We will ensure Congress understands that this successful public-private partnership will strengthen the USVI’s economy, put our fiscal house in order, grow a historic industry and keep production of Captain Morgan rum in the United States for 30 years.”
ping
Time to invade the USVI! ;^D
Congress, my bags are packed!
taxes? The US just said it would subsidize that one operation to the tune of a billion dollars over 30 years or something.
Too bad the Puerto Rican navy only operates from June through August.
Puerto Rico Ping! Please Freepmail me if you want on or off the list.
I think I should explain my “Puerto Rican Navy” comment. It’s what the Virgin Islanders (Brit & U.S.) call the hordes of Puerto Rican private boaters who flock to the BVI/USVI during the summer. For example:
http://caribbean-sailing.blogspot.com/2009/08/puerto-rican-navy-invades-north-sound.html
Tuesday, August 4, 2009
Puerto Rican Navy Invades North Sound
For the 11th consecutive year, Christmas comes in July at North Sound, British Virgin Islands. The huge celebration attracts hundreds of Puerto Ricans, referred to by locals as the “Puerto Rican Navy”, who each year arrive in their boats, anchor and party for three days during the last weekend in July. The Christmas in July event has become the favorite holiday for many Puerto Ricans and during the last week of July, boats from all sizes and types tie up together and enjoy big family fun. The event provided great fun in the sun, excellent service, good atmosphere and fabulous entertainment, including reggae bands, famous Mock Jumbies, the traditional Puerto Rican “parrandas” and international DJs. “The Santa’s Sledge”- a ferry- transported people from Saba Rock and Bitter End Yacht Club to Leverick Bay all night. Popular beer brands in Puerto Rico also sponsored huge parties in the North Sound area, including beach parties and a “New Years Eve” party.
Lived in St Croix for three years in the early 80’s. If you ordered a rum and coke in a bar they would fill the glass with rum and add a splash of coke. Rum was less than a buck a bottle in the grocery store and coke had to be shipped in from the states and was thus expensive. Most of the drinking cruzan’s I knew drank rum and water similar to scotch drinkers.
Stupid argument, Mount Gay Rum (barbados) is by far the best.
Rum war ping!
You, Sir, have not tried this one then.
If we are comparing premium Rums it would have to be Mount Gay 1703, or Extra Old.
When I lived in Mayaquez, I used to drink Barrilito and a brand call Anjejo by Bacardi of Puerto Rico. Ah youth!
Cheers.
Hatuey was the best beer in the Caribbean, until a certain bearded fellow took power in Cuba.
I don't have the empty bottle, so I am not sure of the name.
The only place I have found it is at the distillery.
“PR drink Presidente?”
Some people do. It is not the best selling brand and the stuff is not the same as what is bottled in the Dominican Republic.
The best selling beers in Puerto Rico are Coors Light (yuk), Heineken and Medalla (local light beer).
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