Puerto Rico Resident Commissioner introduces bill to repeal rum excise tax limit

Puerto Rico Resident Commissioner Jenniffer González Colón (NPP, R) introduced HR 4642, which if passed, would repeal the limitation on the cover over of distilled spirit excise taxes to Puerto Rico and the United States Virgin Islands. Co-sponsored by Stacey E. Plaskett of the Virgin Islands (D), it would also codify funding for the Puerto Rico Conservation Trust (PRCT). 

Excise taxes from imported distilled spirits are given to Puerto Rico and the US Virgin Islands. Under current conditions, the excise tax per spirit gallon of rum is $13.50. From that total, $13.25 is included in the cover over given to the two territories, where it is commonly utilized for public services and economic development. Puerto Rico has allocated $.46 per gallon to the PRCT to improve ecological preservation and education in the islands. The US Virgin Islands has also utilized a portion of the revenue to invest in its rum industry. 

In 1984, a $10.5 limit per spirit gallon of rum was placed on the cover over. However, since 1993, the $13.25 revenue has been extended repeatedly. It is now in effect through 2022. González-Colón and Plaskett seek to repeal the cap, arguing the continuation of the cover over’s $13.25 revenue provides the means for economic and infrastructural development in Puerto Rico and the US Virgin Islands. González-Colón has stressed the importance of the cover over’s revenue to continue rebuilding and economic growth after the 2017 hurricanes Maria and Irma. The allocation of funding to the PRCT is also considered vital to ecosystem management after the Islands’ natural disasters. In addition to its support of the PRCT, the revenue has traditionally been earmarked for economic and social development programs, including the Trust for Research, Science and Technology and the Authority for the Financing of Infrastructure. 

HR 4642 will be considered first in the US House Committee on Ways and Means.