Posts Tagged ‘Diageo’

Rum war?

Tuesday, June 22nd, 2010

Curiously, a government handout is causing a stir in the Caribbean,
Puerto Rico, Virgin Islands go head to head on rum, fueling tensions in Congress,

Put simply, the argument involves whether tax dollars can be used to lure a Captain Morgan Rum distillery from Puerto Rico to the Virgin Islands, a project highly coveted for the tax revenue it promises.

The Virgin Islands, a relatively poor, majority-black territory of about 120,000 people, has promised nearly $3 billion in tax subsidies to the owner of Captain Morgan if it moves the rum-making operation to St. Croix, the largest of its three main islands. The money will come from rum taxes the U.S. government gives back to the territories; the Virgin Islands will use the rebates to help build a distillery for the company and provide it cash payments for the next 30 years.

Virgin Islands officials say the deal, along with a similar agreement benefiting the Cruzan rum brand, is an economic development coup that will deliver several hundred jobs and millions of dollars in new rum-tax revenue for roads, schools and other projects. “We are keeping companies in America . . . and strengthening our economy,” said John P. deJongh Jr., governor of the Virgin Islands.

But Puerto Rico, which stands to lose $120 million in annual rum-tax revenue, is pushing Congress to step in. That side portrays the Captain Morgan deal as a U.S. taxpayer bailout for Diageo, the London-based spirits conglomerate that also owns Dom Perignon, Johnnie Walker and other prominent brands.

and look! it’s now become a racial issue

Lawmakers on the side of the Virgin Islands include 18 members of the Congressional Black Caucus, who signed a letter last month opposing Puerto Rico’s attempts to undo the agreement.

Who’s winning the rum war so far?
The lobbyists.

Why am I not surprised?

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