Group labels Menendez’s rum tax bill ‘UnAmerican’

Under the deal, Diageo would receive more of the subsidy than it currently gets in Puerto Rico. Afshin Mohamadi, a Menendez spokesman, said the impetus behind the bill is to keep the subsidy funding economic development on the islands, not line the pockets of a particular company, which in this case would be Diageo. 

“The legislation is called the ‘Reinvesting in the U.S. Territories, Not Corporations Act,'” he told The Hill. “That pretty much says it all. Would American taxpayers rather have their dollars reinvested in schools, hospitals and roads, or in buying off foreign corporations?”

The revenue received by the companies comes from the rum tax subsidy and not from income taxes paid by individuals, according to a representative from the USVI.  

Arnold also predicts that Diageo will not remain in Puerto Rico but move its operation offshore if Congress passes the senator’s bill. 

“Diageo is not going back to Puerto Rico, so why punish the U.S. Virgin Islands?” Arnold said. “The ugly answer is that Puerto Rico gets more [subsidy] revenue if it forces Diageo to leave the United States for a foreign country.”

A recent report by the Congressional Research Service stated that rum subsidy payments to Puerto Rico would only change if rum producers on the island moved to another U.S. territory. If producers left the U.S. the island’s subsidy percentage would remain the same.