The accusations highlight just how far
corporations will go in an effort to absorb tax incentives from local
governments. Even if the investigation
absolves Captain Morgan of the labyrinthine scheme to ship Captain Morgan rum
to a Captain Morgan rum distillery, the investigation has brought the
astounding details of Captain Morgan and Diageo’s tax breaks to light. What possible reason could there be for
Diageo to run a smokescreen Captain Morgan distillery, shipping rum to the rum
factory? How about a $165 million
distillery, paid for entirely by government subsidy, for starters, the Diageo
deal moved Captain Morgan from Puerto Rico to the Island of St. Croix; also
offered subsidized molasses prices; a 90 percent income tax break; property tax
exemptions and even government funding for 35% of Captain Morgan advertising.
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| Diageo Distillery on St. Croix, U.S. Virgin Islands |
When you buy
Captain Morgan rum, you're buying a bottle that your tax money produced. The subsidies afforded Diageo to steal rum distillery jobs from one
U.S. territory and bring it to another.
The subsidies are so comprehensive that the net cost Diageo pays to
produce Captain Morgan rum is zero.
"They
can give it away and still make money," Roberto Serrallés, vice president
of the Serrallés Distillery, told the Orlando
Sentinel in
2010.
This is something that I felt was wrong from the start. First of all Diageo is a British Corporation and has taken advantage of not only the United States Federal program that returns a large portion of the excise tax that is collected on rum sold to the United States, but they have taken advantage of the people of St. Croix in the U.S. Virgin Islands on the money that was given to them to build the distillery. Then you throw in the tax exemptions and it is a real steal of a deal. I can almost live with that, but when they bring rum in to the distillery from another plant outside of the U.S. Virgin Islands in tankers that were said to be carrying molasses that is really taking advantage of a situation. This is flat out fraud and needs to be addressed.
