Financial bailout includes $40 million for USVI

The US House of Representatives on Friday reversed its vote earlier last week and approved a landmark $700 billion financial bailout bill, which includes a two-year extension of the rum tax formula worth an additional $40 million for the US Virgin Islands government.

The revised bill, which cleared the Senate on Wednesday, was signed by President 90 minutes later, immediately enacting it into law.

The USVI rum tax provision, part of a larger package of expiring tax provisions which was added to the bill by the Senate after its initial rejection by the House, has drawn attention from opponents of the financial bailout over the last 36 hours. An effort to strip the rum provision and other tax provisions from the package was defeated Thursday night, when the House Rules Committee voted to approve a closed rule which required an up or down vote on the entire bailout bill without further amendment.

Governor John deJongh said Friday afternoon that he is enormously gratified by the House vote that afternoon. "Congress has acted with courage to save our financial system and resisted the temptation to vote on the basis of emotion alone or a misplaced desire to 'punish' Wall Street. I am also grateful to our friends in the Congress who resisted the effort to delete our rum provision because it provided a good "sound bite" for opponents of the larger bill."

The Governor also commended Congressional Delegate Donna Christensen for her successful efforts to educate her colleagues on the historical purpose and importance of the rum tax provision to the fiscal stability of the Virgin Islands government and the well-being of the Virgin Islands people.

The rum tax measure, which is retroactive to last January 1 when the last Congressional extension expired, ensures that the US Virgin Islands will continue to receive through the end of next year 13.25 dollars for each proof gallon of rum produced in the Territory and sold in the United States.

Without Congressional action, the amount of rum taxes returned to the Virgin Islands would have been set at 10.50 dollars per proof gallon of rum -- a difference of some 20 million dollars a year based on current production figures.
DeJongh reaffirmed the importance of the rum tax formula extension to his plan to grow and develop the rum industry in the Virgin Islands. The Government currently receives approximately 80 million dollars per year in federal rum excise taxes.

That figure is expected to more than double after construction of the new Diageo distillery is completed in 2012.

 (BevX comment: I'm sure they will be sending us all our shares in Rum... fire congress!)