US Virgin Islands Delegate, Senator Menendez in Row over Diageo Deal

By: Caribbean Journal Staff - May 16, 2012

Above: US Virgin Islands Delegate Donna Christensen and New Jersey Senator Robert Menendez

By the Caribbean Journal staff

US Virgin Islands Delegate Donna Christensen said she was “dismayed” that Senator Robert Menendez (D-NJ) used a hearing of the Senate Finance Committee to speak against the Virgin Islands’ agreement with Diageo.

Menendez, a member of the committee, spoke against the deal in a Tuesday morning Senate Finance Oversight Hearing entitled “Tax Reform — What It Could Mean for Tribes and Territories.”

“I find it ironic that Diageo’s rum brand [Captain Morgan] is named after a pirate, because they set a precedent of pillaging a programme that is meant to provide budgetary support to the territories,” Menendez said at the hearing Tuesday morning. “And in my view, the deal Diageo struck with the US Virgin Islands devastates the effectiveness of the cover over programme for the people of the territories by gutting the revenue that is supposed to go to vital public services and sets a precedent that is pretty terrible and it raises, I think, a death spiral to the bottom.”

In 2010, Diageo signed a 30-year agreement to produce Captain Morgan in St Croix.

Now, the company has an operational rum distillery, an economic boost to the territory made all the more important by the closure of St Croix’s HOVENSA oil refinery, the largest in the Caribbean and the territory’s single-biggest employer and primary source of fuel.

Christensen submitted testimony for the record to reiterate her support for the rum cover over programme, which means that any excise tax collected on rum imported into the US is transferred or “covered-over” to the US Virgin Islands’ and Puerto Rico’s treasuries.

“I view comprehensive tax reform legislation not just as a chance to begin addressing our country’s deficit and long-term debt by closing loopholes and adjusting tax rates, but also as an opportunity to make changes to our tax code that will spur economic development and growth,” she wrote in the testimony.

Christensen said “the tax imposed in the United States is not an ordinary excise tax intended to raise revenue for the United States, but rather, as the courts have recognized, an ‘equalization tax’ intended to regulate commerce between the territories and the United States and to preserve a ‘level playing field’ between territorial and mainland distillers.”

Last year, a similar dispute arose between Christensen and Menendez, when Menendez introduced legislation to cap at 10 percent the portion of rum cover over proceeds that territories can reinvest in their local industries.

Christensen said the legislation was based on a set of incorrect premises.

“Senator Menendez wrongly assumed that the Virgin Islands lured Diageo away from Puerto Rico,” she said in April 2011. “The Virgin Islands’ incentives and investment is in the future of its economy, not in a company.”

Popular Posts cape santa maria

The Best Caribbean Beach Resort You’ve Never Heard of 

There’s a boat just offshore called “Escape.”  It’s bobbing in some of the most brilliant, dynamic turquoise water I’ve ever seen, a few meters from a stretch of sand so bright and so white you have to squint to look […]

Marriott Is Opening Its New St Regis Resort In Aruba 

aruba st regis inside the restaurant with chairs

It was more than a decade ago that Marriott opened its first-ever Ritz-Carlton resort in the Dutch Caribbean: the Ritz-Carlton, Aruba, which at the time was the island’s first true five-star resort.  Fast forward to 2024, and Marriott is set […]

From All-Inclusive Resorts to Beaches, Travelers Are Falling in Love With Antigua and Barbuda

antigua barbuda frontier airlines the peninsula with sand

The plunge-pool villas at Hammock Cove. The historic streets of Nelson’s Dockyard. Pool days at Sheer Rocks. Unforgettable honeymoons. Vibrant meals of pepperpot and fungee. Beach bar hopping on the south coast. Endless serenity in Barbuda.  Travelers keep flocking to […]

Related Posts st thomas carnival

St Thomas Carnival Is Set for April 

Pageants, J’ouvert parties, parties and parades are on the agenda for he 2024 edition of St Thomas Carnival in the US Virgin Islands.  And this year’s St Thomas Carnival now has a date, running from April 28 to May 5, […]

The 25 Best Caribbean Beach Bars for 2024

carbet beach

What is the first thing you want to do after you land at an airport in the Caribbean? For many, it’s a pretty simple answer. Make your way, by car or boat, to your sandy chair, cocktail in hand, at […]

The 50 Best Restaurants in the Caribbean - 2024

best restaurants in the caribbean

Don’t be fooled: there is a formula to creating a great restaurant. It’s the same formula we use to evaluate the region’s best places to eat. You see, every great restaurant is built on three core pillars: food, service and […]


Sign up for Caribbean Journal's free newsletter for a daily dose of beaches, hotels, rum and the best Caribbean travel information on the net.

No. Thank You