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The Unrestricted Use of Rum Cover-Over Tax Benefits

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Dear Source:

This writer is once again pleased to commend Governor John deJongh on his success in enhancing Virgin Islands rum production activities and the increased potential of cover over excise tax benefits to the territory based upon increased rum exports to the United States from the Virgin Islands. From the inception of public discussions on Diageo and Cruzan Rum, this writer recognized the value of supporting the efforts of our government in pursuit of the opportunities for diversifying the Virgin Islands economy through increased rum production and exportation to the United States based upon special tax legislation affecting Puerto Rico since 1917 and the Virgin Islands since 1954.
This special tax legislation was enacted by Congress to allow the two territories to become less dependent on the coffers of the national government through the unrestricted use of the cover over funds to address territorial needs as determined by the local legislature of each territory. The key term is "unrestricted". Yet, the Resident Commissioner of the unincorporated territory of Puerto Rico and a few of our own Virgin Islands residents who speak regularly about colonialism generally and also specifically about the Virgin Islands colonial experience have determined that there is a need to crawl backward from greater self-government, a basic tenet of freedom and an anti-colonial gesture, to an era where the Congress is asked to specify limits on how we should spend the unrestricted largess that it has provided both territories.
Virgin Islanders who support the Puerto Rico Resident Commissioner’s attempt to turn the clock backward, make their argument in the name of some nebulous cultural linkage. The Virgin Islands-Puerto Rico public holiday is a one-sided event with only the Virgin Islands as a significant participant in the annual celebration. Is there a similar public holiday in Puerto Rico celebrating this ‘cultural linkage’? The local holiday was created for purely political reasons to woo Virgin Islands voters of Puerto Rican descent during the Paiewonsky era.
Perhaps it is time to revisit the manipulative purpose for its creation and consider seriously returning that day to the workforce. Our own Delegate to Congress was taken to task over the airwaves for not joining the Resident Commissioner of Puerto Rico’s federal legislative effort to enact limitations, where none currently exists, on how cover over special tax benefits can be used by both Puerto Rico and the Virgin Islands. This writer believes that the recent Congressional Research Service (CRS) study validates Delegate Christensen’s reticence to support legislation to limit the usage of cover-over funds. Hopefully there will be no more shuffling by either the Governor of the Virgin Islands or our Delegate to Congress behind either the Governor of Puerto Rico or the Resident Commissioner of Puerto Rico on this matter.
This writer believes that the efforts of the current political administration in advancing the rum production activities of the territory is welcomed since it offsets the nibbling away at the heels of our pre-eminence as a regional tourism destination by new players in the region who are abandoning the growth and exportation of sugarcane and bananas and are now aiming their attention and resources on the tourism product and in direct competition with the Virgin Islands.
Gaylord A. Sprauve
St. Thomas

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