Since 1917, Puerto Rican rum has had an excise tax imposed when sold in the U.S., and the U.S. government has sent roughly the same amount of money back to Puerto Rico. In recent years, this “cover-over,” as it’s called, has amounted to about half a billion dollars a year for Puerto Rico. The U.S. Virgin Islands gets the same deal, but they’ve received only a fraction of the income from it — about 20% as much as Puerto Rico.
In an effort to catch up, the Virgin Islands offered Diageo PLC part of the cover-over if they’d move their distillery from Ponce to St. Croix. They agreed, leaving a 6th generation rum company devastated.
The British company, which makes Captain Morgan rum, will cost Puerto Rico about $140 million this year — money that went toward schools, health care, and the island’s infrastructure.Read More »The Rum Wars