Black Chamber urges Congress to stay out of battle over rum tax

In a Feb. 16 letter sent to Senate Majority Leader Harry Reid (D-Nev.), the Black Chamber — along with the Florida Black Chamber of Commerce — said the partnerships formed between brand-name liquor companies and the U.S. Virgin Islands (USVI) would greatly benefit many black residents.
 
{mosads}“These agreements with Diageo and Fortune Brands significantly help the economy of this African-American-majority U.S. territory at a time of great need, while simultaneously keeping these companies on American soil and preserving their jobs and economic impact,” says the letter, which was signed by Harry Alford, president and CEO of the Black Chamber, and Eugene Franklin, president and CEO of the group’s Florida chapter.
 
What is at stake is an agreement between the Virgin Islands and Diageo that has the rum company moving a rum plant there in return for substantial tax subsidies — up to 50 percent of USVI’s rum tax revenue will be spent on the deal, estimated to be worth about $2.7 billion over 30 years to Diageo.
 
But Puerto Rico, where the Diageo plant has been based, is up in arms over the proposed move. Puerto Rican officials say the move to the Virgin Islands would result in big job losses as well as lost business revenue for the island.
 
It has set off a lobbying battle with several prominent lawmakers of Puerto Rican descent, such as Reps. Luis Gutierrez (D-Ill.) and Nydia Velázquez (D-N.Y.), arguing against the deal. Further, Puerto Rico Resident Commissioner Pedro Pierluisi (D) has offered legislation that would cap the rum tax money that can be spent on the liquor industry by any U.S. territory at ten percent.
 
Sarah Echols, a spokeswoman for Puerto Rico Gov. Luis Fortuño (R), said the Virgin Islands agreement with Diageo was not “fair competition” or in line with congressional intent for the rum tax.

 “This is a slippery slope that could lead to most of the money Congress intended to support government budgets for health, education and other services in the two territories ending up on the balance books of individual rum companies,” Echols said.

In their letter to Reid, Alford and Franklin say “attacks” by Puerto Rico’s leaders against the Virgin Islands-Diageo deal have become “vitriolic” and “reprehensible.” Further, they are firmly against the Pierluisi bill.
 
“Should the proposed anti-USVI legislation be enacted, any state with no stake in the business decisions of another U.S. jurisdiction could attempt to bring any public-private partnership under federal scrutiny,” The letter says. “This type of intervention creates uncertainty and risk in operating in the United States, a troubling possibility as we try to keep Americans at work and strengthen the health of our businesses.”