Rum in the USA Bailout plan

[primate77]

Rum plays a role (as part of the pork stuffing) in the multi-billion dollar United States economic bailout package:

. Sec. 308. Increase in limit on cover over of rum excise tax to Puerto Rico and the Virgin Islands

Extends until December 31, 2009 a rebate against excise taxes charged on rum imported from Puerto Rico and the Virgin Islands. A $13.50 per proof gallon excise tax is applied to distilled spirits imported to the U.S. Under this provision a $13.25 rebate is returned to PR and the VI, and is retroactive back to January 1, 2008. Permanent law sets the rebate at $10.50 per proof gallon, but the PR and VI provisions have generally been in place since the first Clinton Administration. The most recent extension of the $13.50 rebate expired January 1, 2008. Cost is $192 million.

[Edward Hamilton]

This is one of the ways the US government pays for the government of the Virgin Islands and Puerto Rico. In the case of Puerto Rico this money goes into the general fund of Puerto Rico and is used for a variety of expenses.

According to the Associated Press, "In its current form, the estimated cost of the U.S. Caribbean rum tax proposal, which provides payment to Puerto Rico and the U.S. Virgin Islands for rum imported into the mainland, is US$192 million over 10 years."

It should also be noted that the $13.50 per proof gallon Federal Excise Tax is the same for all distilled spirits despite their country of origin. The difference is that for spirits distilled in Puerto Rico and the US Virgin Islands most of that tax has been returned to those governments to help defray some of the cost of administration of those territories.

$13.50 per proof gallon is about $2.25 per 750ml bottle at 80 proof.
In the US a proof gallon is one gallon at 100 proof or 50% abv.
Gallon bottles aren't legal in the US, nor are any bottles labeled in ounces, but 750ml is just under 0.2 gallons so the tax is just under $2.70 on a 100 proof 750ml bottle of distilled spirits.

[Rum Runner]

The rebate on rum for PR and the USVI has been around for quite some time. Each year the US Congress reviews the rebate, raises it, lowers it, or lets it stay the same, and then votes to extend it for another year. I believe the USVI delegate to Congress asked to have the extension tacked onto the bailout bill.

For some reason the press picked up on it like the Feds were bailing out rum companies too.

[primate77]

For some reason the press picked up on it like the Feds were bailing out rum companies too.

Good points, and also thanks Ed.

I did not interpret this to be as a bailout for rum companies - I just found it very interesting how "our" (forum here) love for the spirit - and how it still plays a political role today - guess it has since the formation of this country.

My own personal perception of it though, is the idea that there was so much ($150 billion) tacked onto the bailout package, seems like it was a way to hold the bailout package hostage, and that it wouldn't go through unless there were a lot of these ride-alongs with it.

I understand the points about the government issues, funding, etc in USVI and Puerto Rico. What I found far more interesting and amusing was the deal in the bailout package concerning wooden shaft arrows for children, introduced by senators in Oregon (and incidentally benefitting an arrow producing company in Oregon to the tune of $200,000 per year).

Not to try to start a political debate, but the bailout package is such a hot issue - it seems ashame that there had to be so many riders on the tail end of it to get it through.

I just found it interesting that our beloved spirit made it's way into the package!

[Rum Runner]

- it seems ashame that there had to be so many riders on the tail end of it to get it through.

I hear you primate. Below is one of my favorite quotes by a politician spoken on the Senate floor.

"A billion here, a billion there, pretty soon it adds up to real money."
Senator Everett Dirksen
US politician (1896 - 1969)

[Edward Hamilton]

Here's an interesting comment (http://www.dirksencenter.org/print_emd_billionhere.htm) on the words attributed to Dirksen from the Dirksen Center.

[Rum Runner]

And I suppose next you're going to tell me there is no Santa Claus? :)

Oh well, as the last line in the article stated, even if he did not say it...He would have loved to.

[Hank Koestner]

Well, this is the only earmark that can be justified. Or, I am a little biased?