For Immediate Release Contact: Tionee Scotland
February 14, 2025 202-808-6129
PRESS RELEASE
PLASKETT CO-LEADS LEGISLATION WITH REPUBLICAN CONGRESSMAN TO INCREASE RUM COVER OVER
St. Croix, USVI – This week, Congresswoman Plaskett (D-VI-AL) and her Republican colleague, Congressman Ron Estes (R-KS-4), introduced bipartisan legislation to increase the ‘rum cover over’ which is the amount of money transferred to the U.S. Virgin Islands and Puerto Rico from the rebate of federal excise taxes on distilled spirits produced in or imported into the rest of the United States from the two U.S. territories.
The rum cover over is one of the primary funding sources to promote economic development and create jobs in Puerto Rico and the U.S. Virgin Islands. After Hurricanes Irma and Maria, thanks to Congresswoman Plaskett’s and former Congresswoman Jenniffer González-Colón’s advocacy, Congress passed a 5-year increase of the cover over to $13.25, from $10.50, in the Bipartisan Budget Act of 2018 (P.L. 115-123), which is the public law that gave the Virgin Islands and Puerto Rico the unprecedented funding to rebuild the territories. The temporary increase expired in December of 2021. The legislation being introduced by Congressman Estes and co-led by Congresswoman Plaskett will increase the cover over rate to $13.25 until 2032, and the additional funds for the $13.25 rate will be given retroactively to the Virgin Islands Government.
“The cover-over has been a fundamental part of the tax relationship between the United States and its territories going back over a century,” said Congresswoman Plaskett. “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 am thankful to my colleague, Congressman Ron Estes (R-KS), for co-leading this vital legislation that supports the Virgin Islands economy and our constituents.
Congresswoman Plaskett went on to share, “I would like to thank Senate President Milton Potter and Senators Novelle Francis, Marvin Blyden and Kurt Vialet, as well as GERS Administrator Angel Dawson and Chairman Dwane Callwood for coming to Washington, D.C. this week. We had the opportunity to meet with my Republican and Democrat colleagues on the Ways and Means Committee, Democratic leadership in the House of Representatives, and lobbyists from the rum industry. Our collective advocacy is paramount for policies that will advance the Virgin Islands.
“In 2025, many of the temporary provisions enacted under President Trump’s 2017 Tax Cuts and Jobs Act (TCJA) will expire. The introduction of this bill is one step in the legislative process, but it is no secret that there will be challenges to crafting this year’s tax bill. Ongoing Republican negotiations have outlined a maximum 10-year time frame for tax extenders. In order to comply with these parameters, this legislation will apply, retroactively, from 2022 and extend through 2032. In my role on the Ways and Means and Budget Committees, I will continue to work with my Republican and Democrat colleagues to advocate for the increased rum cover over rate, which is crucial to maintaining the long-term stability and economic growth of the U.S. Virgin Islands.”
Background:
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. This legislation would amend Section 7652 of the Internal Revenue Code of 1986, making $13.25 per proof gallon the amount covered over by law until 2032, enhancing long-term sustainable economic growth in the two U.S. territories.
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