As Congress begins work on a budget reconciliation and tax reform package, Governor Jenniffer Gonzalez-Colón announced today that Representatives Ron Estes (R-Kansas) and Stacey Plaskett (D-U.S. Virgin Islands) have introduced bipartisan legislation to temporarily increase the amount of funding transferred to Puerto Rico and the U.S. Virgin Islands from the excise taxes collected on rum produced in the two territories and imported in to the rest of the United States, commonly known as the rum cover-over.  The bill would extend the increase through 2032 and make it retroactive to January 1, 2022.

Although the Governor has supported making the increase of the rum-coverprogram permanent since her time in Congress, this language represents an agreement between the Governments of Puerto Rico and the U.S. Virgin Islands and stakeholders as the best viable option to be included in tax legislation considered by Congress.

“Funding from the rum cover-over program helps fund critical services on the Island as well as conservation efforts. I thank my good friends Representatives Estes and Plaskett, Governor Bryan, the Puerto Rico Conservation Trust, and the private sector for their partnership in supporting this endeavor that spurs economic development, creates jobs, and helps meet the needs of our communities,” said Governor González-Colón.

‍“Puerto Rico and the US Virgin Islands are of vital importance to America’s national security. The economic integrity of the Territories is critical to ensuring we can fulfill our national security role, and the rum cover-over – which lapsed during the last administration and is now overdue for renewal – is essential to our economic stability. We look forward to working with President Trump and the members of the 119th Congress to ensure this legislation is enacted,” said Governor Albert Bryan Jr. of the U.S. Virgin Islands.

‍“Puerto Ricans and Virgin Islanders are proud of the products they produce on their respective islands that are enjoyed by people across the world, including those exported to the United States. I'm pleased to lead the common sense tax policy to increase the rum excise tax cover-over to Puerto Rico and the U.S. Virgin Islands, which will advance the economic prosperity of both territories, and I look forward to working with Governor Jenniffer Gonzalez-Colon and Delegate Stacey Plaskett to continue to pursue tax policies that benefit the United States and our territories,” said Representative Ron Estes of Kansas.

“It has been an honor to stand alongside my Caribbean sister as a fellow Member of Congress in advocacy for the increase of our rum coverover rate (RCO) from $10.50 to $13.25, which we secured for a 5-year period after Hurricanes Irma and Maria. I am pleased to co-lead legislation to increase RCO to $13.25 until 2032 and retroactively provide additional funds at the $13.25 rate to the U.S. Virgin Islands and Puerto Rico. The cover-over has been a fundamental part of the tax relationship between the United States and its territories going back over a century. These funds, which represent nearly 25% of the Virgin Islands Government’s annual budget, are critical for stabilizing the government employees' pension program, supporting infrastructure projects, and attracting investments to diversify the economy beyond tourism. I would like to thank Governor González-Colón for her continued support in pursuit of this critical measure,” said Representative Stacey E. Plaskett of the U.S. Virgin Islands.

‍Under current law, excise tax collections on imported rum are transferred to Puerto Rico and the U.S. Virgin Islands at the rate of $13.25 per proof gallon; $10.50 per proof gallon is in permanent law, and the remaining $2.75 per proof gallon requires periodic reauthorization by Congress.  In 2018, then-Congresswoman González-Colón—who was also Co-Chair of the Congressional Rum Caucus—successfully secured language in the Bipartisan Budget Act of 2018 extending the increased rate through 2021.  Annually, Puerto Rico receives approximately $400 million from the rum excise tax cover-over.