U.S. Senate committee passes V.I. rum tax extension
Published: August 3, 2012
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The U.S. Senate Finance Committee on Thursday passed a package of tax extenders that included a measure that would keep rum tax revenues flowing to the territory at the $13.25 per proof gallon rate.
The measure forwarded out of the Senate committee on Thursday afternoon was part of the Chairman's Mark of the Family and Business Tax Cut Certainty Act of 2012, a package of extenders, according to a statement released by V.I. Delegate to Congress Donna Christensen. The bill moved forward with a vote of 19-5.
"I am pleased that the rum cover passed without amendment with the package of extenders, which likely guarantees that it will pass when it goes before the Senate and the House," Christensen said in the release.
For every proof-gallon of Virgin Islands-produced rum exported to the U.S. mainland, the federal government collects $13.50 in excise taxes, of which $13.25 is returned to the territory's coffers. The territory used to get $10.50 back, but in 1999, Congress passed legislation that temporarily increased that rebate to $13.25 per proof gallon.
That measure has been renewed a number of times since then. The package of tax extenders that passed the Senate Finance Committee on Thursday would keep the level at $13.25 through December 2013, according to Christensen's statement.
An amendment had been proposed by Sen. Jeff Bingaman and Sen. Robert Menendez that would limit how the territories could use their rum tax money, but the amendment was never offered, according to Christensen.
Christensen said she wrote to ask the Senate Finance Committee for a clean extension of the coverover program and contacted senators this week asking them to support her request.
A statement released by Government House said that Gov. John deJongh Jr. wrote the committee about his concerns and the issues raised by the proposed amendment.
"The rum cover-over program is essential to generating economic growth in the U.S. Virgin Islands," the governor said. "I commend the members of the Senate Finance Committee for assuring the program's continued success through the tax extenders bill. I will continue to strongly encourage Congressional leaders to reject harmful amendments from special interests which seek to harm our already fragile economy." Recent political concerns about "corporate welfare" and other issues have made extenders the focal point of the tax reform debate and its passage has had an uncertain path.
The extender package will now move to the full U.S. Senate for a vote before moving to the U.S. House of Representative for final passage.