Rum tax revenues will continue to flow to Puerto Rico and the U.S. Virgin Islands through the end of next year after Congress last week passed a bill to extend a $13.50 per-gallon tax on the rum produced there.
Lawmakers included the rum tax issue in the federal government's $700 billion bailout bill, which passed in the House in a 263 to 171 vote. Extending the rum tax to the end of 2009 benefits both jurisdictions. The commonwealth has $2.1 billion of Puerto Rico Infrastructure Financing Authority debt secured by rum-tax receipts and the revenues are important to the USVI's general fund. In addition, the USVI is preparing to leverage anticipated future rum tax revenues in a $250 million bond deal that will help support a new distillery plant for spirit maker Diageo, which produces Captain Morgan rum.