WASHINGTON – U.S. Senators Bill Cassidy, M.D. (R-LA), Roger Wicker (R-MS), Kirsten Gillibrand (D-NY), and Ben Ray Luján (D-NM) today reintroduced legislation to modify the amount of revenue transferred to Puerto Rico and the U.S. Virgin Islands—known as the ‘rum cover over’—from the excise taxes collected on rum that is produced in or imported into the rest of the United States from the two U.S. territories.
“Louisiana knows what it means to turn sugarcane into opportunity—from the fields of South Louisiana to the stills of our craft distillers,” said Dr. Cassidy. “Stability in the rum industry means more jobs in Louisiana and stronger U.S. supply chains.”
“The rum cover over is an important revenue stream that promotes economic development and helps create good-paying jobs throughout Puerto Rico and the U.S. Virgin Islands. However, the cover over continues to face congressional uncertainty that puts the wellbeing and stability of so many residents of Puerto Rico and the U.S. Virgin Islands at risk. This bipartisan bill would increase the amount that the territories receive from excise taxes on rum production, offering them more certainty and allowing them to fund critical services like health care and environmental protection,” said Senator Gillibrand.
“For decades, the rum cover over has been vital in creating jobs and fostering economic development in Puerto Rico and the U.S. Virgin Islands,” said Senator Luján. “But the recurring threat of funding cliffs puts this vital support at risk and creates instability. This bipartisan legislation will safeguard these revenues and ensure that both Puerto Rico and the U.S. Virgin Islands can reliably count on rum excise tax funds to reinvest in their communities.”
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, eliminating the need for Congressional action and enhancing long-term sustainable economic growth in the two U.S. territories.
This effort would also add a new provision that would require a portion of the funds transferred to Puerto Rico to go towards the Puerto Rico Conservation Trust. This private, nonprofit organization provides for the conservation of natural areas on the island, including through sustainable agricultural efforts, projects that promote the reforestation and restoration of Puerto Rico’s natural habitat, and the development of educational programs that foster the protection of natural areas on the island.
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