Published: 8/23/2010

Written by Alan Bromley - Staff Writer New Patriot Journal


Wrapped inside the Troubled Asset Relief Program (TARP) lies a provision that gives a British
rum-making corporation, Diageo, a tax break of $2.7 billion to move their facilities from Puerto
Rico (where they resided for 30 years) to the U.S. Virgin Islands – and Puerto Rican politicians
and activists are up in arms, finding Congress unwilling to make the tax laws comparable in both
places, and even unwilling to be transparent about which politicians in Congress, if any, may
have benefitted from the unusual tax break.

But they do know that embattled New York Congressman Charlie Rangel (D) as (past) chairman
of the Ways & Means Committee, refused – despite a unified plea from all of Puerto Rico’s
legislators-- to even hold hearings on a bill (HR 2122) that would have made the rum-producing
corporate tax breaks in the U.S. Virgin Islands comparable to those in Puerto Rico.

And now there is a groundswell of support, led Roberto DePosada, former President of the
Latino Coalition, and Naomi Lopez Bauman, adjunct fellow at the Pelican Institute for Public
Policy in Louisiana, to have Congress, perhaps through its busy Ethics Committee, get Rangel
and others on the Ways & Means Committee, to testify under oath, that they are not sharing in
the Virgin Islands’ and Diageo’s new-found wealth. The tax relief to the British corporation may
be worth as much as $6 billion, considering it entered into a 60-year agreement to build and
run a new rum distillery in the Virgin Island of St. Croix---a distillery that will employ 40 locals!

Puerto Rico has a law that caps tax rebates to rum makers at 10%, while the Virgin Islands have
no such law, and under the deal Diageo struck with the Virgin Islands, the British corporation
will get a 90% tax break, coupled with property tax exemptions – and guaranteed sugar prices
for 60 years.

A great move for Diageo, agitated activists and Puerto Rican politicians say. The politicians
from Puerto Rico wanted the U.S. Congress to equalize the tax breaks—but “Uncle Charlie”
refused to even hold hearings, so the activists are demanding transparency, to try to see if any
Washington politicians, starting with Mr. Rangel, are getting anything more than a buzz from
the rum deal of the century.