Tags: obama | british | tax | breaks

Obama Gives $2.7B in Tax Breaks to British Rum Co.

Tuesday, 01 Sep 2009 02:52 PM

By Jim Meyers

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It's enough to drive taxpayers to drink — billions of U.S. tax dollars are being earmarked for the giant British liquor producer that makes Captain Morgan rum.

Under an agreement, London-based Diageo PLC — the world's biggest distilled spirits maker — will receive tax credits and other benefits worth $2.7 billion over 30 years, including $165 million to build a distillery on the island of St. Croix in the Virgin Islands, a U.S. territory.

"The U.S. taxpayer is basically being asked to line the pockets of the world's largest liquor producer," Steve Ellis, vice president of Taxpayers for Common Sense, told the Chicago Tribune.

A special tax is collected on every bottle of rum sold in the U.S. — about $470 million a year. Most of the money is given to the governments of rum-producing U.S. territories in the Caribbean to help the local economies.

The Virgin Islands government will finance the new distillery by issuing bonds that will be paid off with future rum tax dollars.

Captain Morgan is currently produced in Puerto Rico, also a U.S. territory, and officials there say as many as 300 workers making Captain Morgan will lose their jobs if Diageo moves its operations to St. Croix, according to the Tribune.

Virgin Islands officials say the move will bring up to 70 jobs to St. Croix.

"It's insulting that the money we give is essentially paying for a foreign corporation to move from one U.S. location to another, while cutting jobs," said Ellis.

Bacardi, another huge rum producer, still has a large operation in Puerto Rico.

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