Rep. Jenniffer González pursues the permanence of the rum tax cover and to secure funds for the Puerto Rico Conservation Trust

Washington, D.C.- With the introduction of HR 4642, Congresswoman, Jenniffer González Colón (R-PR), seeks to make permanent the revenue that Puerto Rico receives from the rum cover over and to codify an allocation of funding for the Conservation Trust (PRCT) in law, among other issues.

"Now that the reconstruction in Puerto Rico is moving forward, it cannot be under the uncertainty of whether or not it has the resources to continue to carry it out. An important source is the rum cover over, which has the potential to stimulate long-term sustainable economic growth, create jobs and attract additional investment. It is time to put an end to the uncertainty facing Puerto Rico, the Conservation Trust and the Virgin Islands and pass a law that makes the rum cover over permanent and assures the .46 cent per gallon of alcohol to the Conservation Trust", González Colón said.

"This bill would fix a long-standing fiscal cliff related to the rebate of federal excise taxes on distilled spirits production in the territories: the 'rum cover over'," stated Congresswoman Plaskett (D-USVI). "The cover-over has been part of the fundamental tax relationship between the United States and its Caribbean territories going back over a century. This bill would repeal the cap that has been imposed on the program since 1984. That will help to provide essential public services and to encourage production and employment in both the U.S. Virgin Islands and Puerto Rico as we recover from pandemic and economic downturn."

Under current law, any excise tax collected on rum imported into the United States is transferred (i.e., "covered over") to the Treasuries of Puerto Rico and the U.S. Virgin Islands. Currently, there is an excise tax of $13.50 per spirit gallon on all rum sold in the United States. $10.50 of that is covered over to Puerto Rico; and since 1999, an additional $2.75 has been added to this cover over, bringing the total to $13.25. This increase results in millions of dollars in additional revenue for Puerto Rico each year, which is used in part for economic development and is also used for general government expenses.

Since 1999, a portion of this additional revenue - $.46 per spirit gallon - has been allocated to fund PRCT, which was established by agreement between the Governor of Puerto Rico and the U.S. Secretary of the Interior in 1968.

"The Trust and its dependencies such as Para la Naturaleza, plays a critical role in supporting both governments in the areas of nature conservation, historic preservation, and public education. Importantly, supporting such activities has the potential to lead to an increase in eco-tourism on the island, which in turn has the potential to result in additional revenue for Puerto Rico," the congresswoman explained.

The certainty of this funding is necessary to enable the Trust to continue to fulfill its critical role in implementing a long-term ecological recovery strategy for the island which includes a seven-year reforestation plan, assisting farmers and producers harmed by the hurricanes, and the development of sustainable communities.

"The PRCT's work is more important now than ever. After two devastating hurricanes in 2017, back-to-back earthquakes in 2020, and the current COVID-19 pandemic, the PRCT's support of Puerto Rico's communities and ecosystems is essential to the vitality of the Island. Ultimately, the PRCT relies on funding from rum cover-over funds, and H.R. 4642 will ensure that the PRCT can continue to fulfill its critical role in implementing a long-term ecological recovery strategy for the Island which includes among other principal initiatives a seven-year reforestation plan, assisting farmers and producers harmed by the hurricanes, and the development of sustainable communities.", expressed Fernando E. Lloveras San Miguel, the executive director of the Conservation Trust in his letter of support for the bill.

By the time Puerto Rico was hit by two consecutive hurricanes in 2017, the Congresswoman managed to extend the rum tax cover until 2022 through legislation, which use to be legislated annually. The Congresswoman seeks to end the certainty and make the cover permanent with this legislation. The government of Puerto Rico has always allocated the vast majority of the rum tax cover to its general fund, as well as to entities that contribute to the general welfare of the population, such as the Conservation Trust, the Authority for the Financing of Infrastructure, and the Trust for Research, Science and Technology.

HR 4642 is a bipartisan bill with 10 cosponsors. In addition to González Colón (R-PR) and Stacey Plaskett (D-USVI) and Don Young (R-AK), Charlie Crist (D-FL), Thomas Suozzi (D-NY), Jimmy Panetta (D-CA), Earl L. "Buddy" Carter (R-GA), Bruce Westerman (R-AR), John Katko (R-NY) and Nydia Velázquez (D-NY).

The Member announced that a companion bill is being worked on with the U.S. Senate.