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News Americas, WASHINGTON, D.C., Fri. May 12, 2023: Several members of the US Congress have introduced a bill aimed at permanently raising the rum cover rate, which provides crucial support to bonds in the United States Virgin Islands (USVI) and Puerto Rico. The rum cover, a tax imposed on rum sold in the 50 states, serves as a vital revenue stream for the USVI matching fund bonds and Puerto Rico Infrastructure Finance Authority rum bonds, according to The Bond Buyer.

Previously, in the aftermath of devastating hurricanes that struck the region in 2071, the rum cover rate had been increased to $13.25 per proof gallon for a number of years. However, when the temporary increase expired in August, the U.S. Office of Insular Affairs announced that the rate would revert to $10.50.


In an effort to maintain stable support for the USVI and Puerto Rico, members of Congress have come together to introduce a bill that seeks to permanently raise the rum cover rate. This measure aims to ensure a consistent and reliable source of revenue for bonds issued by these territories, which play a vital role in financing critical infrastructure projects and facilitating economic development.

“The rum cover over is a critical tool to promote economic development and create good paying jobs in Puerto Rico and the U.S. Virgin Islands,” said Sen. Menendez. “Our bipartisan, bicameral legislation would eliminate the limitation on funds returned to Puerto Rico and the U.S. Virgin Islands for the production and transportation of rum to the mainland United States, ensuring these two territories benefit fully from the taxes on rum sold in the continental U.S. This bill would also ensure that a portion of the funds covered over to Puerto Rico will be transferred to the Puerto Rico Conservation Trust Fund to support the island’s sustainability and conservation efforts.”

“Our rum industry in Puerto Rico has great economic impact, more than 70% of the rum that is consumed here in the United States, and 80% of the rum consumed around the world is made in Puerto Rico. Annually, we receive more than $330 million from the rum excise tax cover-over, which has been vital to supporting critical services, including healthcare, education, and public safety, and funding environmental and other conservation initiatives. This increase is vital to address uncertainty both Puerto Rico and USVI have experienced, including funding cliffs in several occasions, and ensure resources continue reaching our community,” said Rep. González-Colón, Co-Founder and Co-Chair of the Congressional Rum Caucus.

By securing a higher rum cover rate, the bill aims to provide a sustainable funding mechanism that will contribute to the ongoing recovery and long-term growth of the USVI and Puerto Rico. The additional revenue generated from the increased tax would help fund essential public projects, including the rebuilding of infrastructure, improving healthcare systems, and supporting initiatives to enhance tourism and attract private investments.

The bill’s introduction underscores the commitment of Congress to provide permanent support for the USVI and Puerto Rico, acknowledging the importance of sustained assistance in their recovery and development efforts. By ensuring a stable and increased revenue stream through the rum cover rate, these territories can make significant strides towards building resilient communities and vibrant economies.

The proposed legislation will now go through the legislative process, including committee review and potential amendments, before it can be voted on by both the House of Representatives and the Senate. If passed and signed into law, it would provide a significant boost to the ongoing efforts to rebuild and strengthen the USVI and Puerto Rico, enabling them to overcome the challenges they have faced in recent years.

The bill’s introduction has garnered support from various stakeholders, including local government officials, advocacy groups, and community organizations in the USVI and Puerto Rico. They recognize the importance of a permanent and increased rum cover rate in securing a stable financial foundation for these territories and enabling them to prosper in the years to come.

As the legislative process unfolds, Congress will continue to work towards finding solutions that promote the long-term well-being and resilience of the US Virgin Islands and Puerto Rico.

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