Rum was also on the agenda for frequent Virgin Islands visitor, Vice-President Biden, when he attended a meeting this week with the Caribbean Community (Caricom) leaders to highlight concerns about the impact of US rum subsidies to Puerto Rico and the US Virgin Islands. “The most contentious issue is rum subsidies to Puerto Rico and the US Virgin Islands.  The main rum producers in question are Puerto Rico's Bacardi and Captain Morgan and the Virgin Islands Cruzan Rum. 

We don’t expect (Biden) to make a decision today but we expect to let him know the whole position and the full ramifications of continuing those subsidies and that it will clearly affect rum production,” Trade Minister Vasant Bharath said earlier this week. The talks have been described by some as 'brutal' (maybe the Vice President should head back to the Virgin Islands for some needed R&R - and rum?). 

It has been claimed by several several members of the Caricom that the US has been running a “Rum Cover-Over Programme” since 1917, which consists of a tax levied on sales of spirits in the US market. 

The “contentious issue” has to do with subsidies extended to rum producers in Puerto Rico and the US Virgin Islands. In January, President Barack Obama signed into law a bill averting a threatened fiscal cliff of higher taxes and spending cuts. That legislation included special gifts to several US corporations such as a provision extending a 1917 law that imposes  a $13.50 tax on  each gallon of rum produced in or imported into the United States. 

Most of this revenue is transferred to the US Virgin Islands and Puerto Rico—US dependencies—to aid these territories’ economic development.  Many of the rum producing islands feel that Puerto Rico and the US Virgin Islands use much of these funds to encourage their local rum industries, at the expense of other Caribbean rum-producing countries.  The view from the Virgin Islands point of view is that the funds derived by rum products is essential fuel for the VI economy. So, know that wherever you are, when you enjoy your rum and tonic or dark n' stormy rum cocktail - which, hopefully, is made from Virgin Islands Cruzan rum - know that you are doing good things for the Virgin Islands economy!