Barbados’ Commerce Minister Donville Inniss has given the United States a tongue lashing for continuing to support Puerto Rican and US Virgin Islands rum producers with a “cover-over” tax at the expense of Caribbean rum producers.
He argues that the policy presents a significant challenge to manufacturers and goes “against the fundamental tenets of fair trade.”
Cover-over subsidies are annual payments from the US government to the US Virgin Islands (USVI) and Puerto Rico out of federal excise taxes. When a bottle of rum is produced in either the USVI or Puerto Rico, and then sold in the US, the federal excise tax on that bottle is returned to its place of production.
“It has done and can do considerable damage to the economies in the region, and we have been lobbying over and over again for that cover-over tax to be removed,” he said as he addressed a recent West Indies Rum and Spirit Producers Association cocktail reception.
Before an audience which included the European Union’s Ambassador Mikael Barford, Inniss argued that the tax made it difficult for regional rum to compete in the U.S. market against similar products being manufactured in the US Virgin Islands and Puerto Rico.