Governor de Jongh Commends Congressional Research Service Rum Study

Recent report clears misconceptions / justifies Virgin Islands rum deals

Governor John P. de Jongh, Jr. this weekend commended the Congressional Research Service (CRS) for clearing up misconceptions and correcting much of the misinformation about the two public-private partnerships negotiated in the Virgin Islands during the last two years, which have led to the redevelopment and strengthening of the local rum industry and has secured new dependable revenue streams for the Territory.

“The recent CRS rum study sets the record straight and clears up the false allegations that have been coming from Puerto Rico, including claims that the Virgin Islands is ‘poaching’ its rum companies through unfair taxpayer subsidies,” de Jongh said. 

The CRS report, which was published on January 20, 2010, confirmed that Diageo was already leaving Puerto Rico when they contacted the U.S. Virgin Islands. It also affirmed that the U.S. Virgin Islands public private partnerships were based on investing a portion of the special taxes imposed on territorial rum producers, not on consumers or taxpayers in the United States.

de Jongh said that the CRS study also concluded that legislation proposed by Puerto Rico Resident Commissioner Pedro Pierluisi would severely limit economic development initiatives not only in the Virgin Islands, but also in Puerto Rico as well. de Jongh said that the CRS study cited the legislative history of the cover-over statute which confirms Congress’s intent that the Virgin Islands use its cover-over revenues for “stimulating and increasing business in every possible way.” 

“That is precisely the purpose of our public-private partnerships with Diageo and Fortune Brands,” de Jongh said. These partnerships will protect our economy and secure our fiscal future for the next 30 years. They will strengthen our rum industry in an era of growing global competition, increase our government revenues, and help work towards lessening our dependence on federal appropriations.”

The governor also noted that the Pierluisi bill would not only limit the Virgin Islands’ use of cover-over revenues to invest in its rum industry, but it would also limit the territory’s use of its own General Fund revenues. “It is outrageous that a Member of Congress would introduce legislation that would bar our Legislature, or any Legislature for that matter, from using its own general fund revenues for any legislative purpose duly considered and enacted by that body,” de Jongh said. “California does not tell Florida what its legislature can, or cannot, do with their own money. I find it completely unacceptable for Puerto Rico to be telling the Virgin Islands Legislature what we can do with our funds.”

Government House Director of Communications Jean P. Greaux, Jr. said Sunday, “The real reason for the Pierluisi bill, as suggested by the CRS study, appears to be that Puerto Rico would be better off if Diageo had gone to Guatemala or South America rather than the Virgin Islands. As a point of fact, Greaux added, “Puerto Rico would have been fine with Diageo going anywhere but the U.S. Virgin Islands.”

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