Bahama Bob's Rumstyles

Thursday, January 3, 2013

The United States Extends Cover Over Subsidy

Diageo Grand Opening of Rum Distillery in St. Croix
     "It is U.S. policy to tax rum producers like Diageo and Bacardi nearly $14 for every gallon of rum they make outside the country and sell in the U.S. But the tax is merely a gimmick that gets reinvested in the Virgin Islands and the Puerto Rico in the form of aid. The alcohol industry's more than $13/per gallon kickback has been extended as part of the fiscal cliff negotiations. Pro Publica estimates the tax break gives Puerto Rico and the Virgin Islands a total of $480 million in aid for rum production."

     It seems that here we are in a fiscal disaster and we still don't want to give up feeding the $480 Million for the rum cover over tax program that is causing so much problem throughout the rum producing world.     It would seem to me that the money could be better spent investing in American rum producers not only in the Virgin Islands and Puerto Rico, but those within the boarders of the United States proper.   This is a one sided program that is a direct aide of money to these companies and not just a tax break that was offered to so many other foreign corporations that have opted to build plants here in the United States.

     "Prime Minister Freundel Stuart made this clear as he spoke with members of the media following a tour of Foursquare Rum Distillery in St Philip on Friday."

     "Stuart disclosed that, at present, Puerto Rico and the US Virgin Islands were able to purchase products much cheaper than Caribbean rum producers and, as a result, this gave them an unfair advantage as far as their rum exports were concerned. He said this matter was engaging the attention of CARICOM states and was being "actively" addressed."

     He added: "The rum industry is too important to Barbados, and yes it is a CARICOM issue, but I don't think any CARICOM country has any reason to be as concerned about this as Barbados. Rum is assuming an importance for Barbados that we cannot afford to ignore. So, this is a front burner issue and we are following it very closely."

     "The prime minister disclosed that he recently held lengthy discussions with the US Assistant Secretary of State on the matter and also met with Barbados's ambassador to Washington, John Beale, as well as Barbados's ambassador to CARICOM, Robert ‘Bobby' Morris. Furthermore, he explained that Barbados's ambassador to Geneva, Dr Marion Williams, was also looking into the issue."
     It seems that the issue keeps falling on deaf ears here in Washington, D.C., I wonder what it will take to wake up the congress to an issue that is not only hurting the rum industry as a whole, but the rum producers within the United States as well who are paying an excise tax to the Federal Government.   After a promise to help the "middle class" in the less than 2 month ago elections we are hand $480 million off to be invested in companies that are not even American companies.


1 comment:

  1. Caribbean Rum Under Attack

    Note: See link to petition below. Stop the attack!

    On January 1st, our dear Congress passed legislation avoiding the "fiscal cliff". But one "add-on" to the bill gives a huge gift to two mega-distilling conglomerates - Bacardi and Diageo - in the US Virgin Islands and Puerto Rico.

    The effects of this are immediate and threaten the continued existence and availbility of Caribbean rum! Here's how:

    1. The USVI and Puerto Rico receive nearly a billion dollars in subsidies, much of which is simply passed along to the mega-distillers.

    2. The US also gave Diageo $2.7 Billion - yes billions - to move and build a huge distillery in the USVI

    3. The new fiscal cliff law also imposes a huge penalty - $13.50 per gallon - for all other Caribbean rum.

    Friends, this is a huge crisis. CARICOM - which represents the rest of the Caribbean countries and distillers - are furious, as this self-dealing move threatens their continued existence as rum producers, and a devastating blow to their economies, which are largely rum based.

    Especially affected are the Dominican Republic, the Bahamas, Jamaica, Barbados and Guyana who are highly dependent on the now protected US Market. They face failure and going out of business. Accordingly, the CARIFORUM is now lawyering up and plan to challenge this insult, dirty dealling and what they cite as a direct and clear violation of the WTO regulations on free trade.

    They are right. All rum lovers who hope to continue to enjoy a wide diversity of rum from all over the Caribbean must band together and protest this horrible giveaway to the already hugely profitable mega-companies, and who seem to operating from nothing beyond greed and profit, even if it destroys their smaller but honest competition.

    There is a a petition against these unfair subsidies and taxes:

    Personally, I am appalled at what has happened, especially in the dark of night and slipped into the fiscal cliff bill. To favor a very few - two politically powerful conglomerates - to seriously harm the many serves no one. I sincerely hope this action can be reversed as the idea that we may lose access to our favorite Caribbean rums is simply unthinkable.