Black Caucus members ask Rangel to stay out of Caribbean rum dispute

More than two dozen Congressional Black Caucus members are urging Rep. Charles Rangel (D-N.Y.) not to interfere with a rum deal the U.S. Virgin Islands (USVI) has inked with one of the largest liquor companies in the world.

The USVI and Puerto Rico have been engaged in a nasty dispute over the deal for months. It centers on $2.7 billion in tax benefits the USVI government plans to give the liquor giant Diageo over the next 30 years for moving its Captain Morgan rum production to St. Croix.

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Puerto Rican officials and supporters are livid because Diageo had long contracted with a Puerto Rican distillery for its rum production, but decided to change venues when its contract is up in 2011.

Puerto Rican supporters in Congress argue that the USVI’s deal with Diageo improperly uses the federal taxes the islands gets back from the U.S. government from its rum sales for corporate welfare instead of territory infrastructure needs the taxes were originally intended to provide.

So far Rangel, the chairman of the Ways and Means Committee, has failed to intervene or conduct a hearing on the issue. The majority of the Congressional Black Caucus (CBC), including its chairwoman, Barbara Lee (D-Calif.), and USVI Del. Donna Christensen (D), want to keep it that way.

“We ask you to consider these arguments with extreme caution as Congress has spoken on this issue in a clear and concise way before and we should not disadvantage territorial governments, like the U.S. Virgin Islands, who have acted well within both the letter and the spirit of the rules set forth for them to maintain jobs in the U.S. and better their territory,” the CBC members wrote.

They also pointed out that the U.S. tax code specifically allows territories to use these rum taxes at their discretion. The code, they wrote, specifies that the revenues “may be expended as the legislature [of the territory] may determine.”

The letter is the latest salvo in an intense dispute in which both sides have spent hundreds of thousands of dollars on lobbyists. Before the Thanksgiving break, Christensen wrote Pelosi to complain about Puerto Rico’s aggressive lobbying against the deal, arguing that she and another members have been subjected to a misinformation campaign.

Before that, Puerto Rico Resident Commissioner Pedro Pierluisi (D) and Democratic Reps. Jose Serrano (N.Y.), Nydia Velazquez (N.Y.) and Luis GutierrezLuis Vicente GutierrezThe Hill's Campaign Report: Democratic primary fight shifts to South Carolina, Nevada Democrats rally behind incumbents as Lipinski takes liberal fire Dem leader says party can include abortion opponents MORE (Ill.) fired off their own letter to Pelosi, imploring her to schedule a meeting with them to discuss their concerns about the tax deal.