Congresswoman Plaskett, a Member of the House Ways and Means, Budget and Agriculture Committees released the following statement regarding the recent announcement that The U.S. Department of the Interior’s Office of Insular Affairs has approved the payment of approximately $226,165,037 to the U.S. Virgin Islands (USVI) and $70,398,471 to Guam. The advance payments represent 2023 estimated rum tax-cover over payments for the USVI and 2023 federal income tax Section 30 advance payments for Guam and will be made the week ending September 9th.
Plaskett stated: “Since 1984 and the passage of the Deficit Reduction Act (P.L. 98-369), the cover over was capped and limited to $10.50. After that time, through various ‘tax extender’ pieces of legislation, those in Washington fighting for the interests of the Virgin Islands and Puerto Rico have been able to temporarily increase the cap to first $12.50 and then to $13.25 for short periods of time (usually one, two or three-year periods).
“After Hurricanes Irma and Maria, we were able to place a 5-year increase of the cover over to $13.25 in the Bipartisan Budget Act of 2018 (P.L. 115-123), which is the public law that gave the Virgin Islands and Puerto Rico the unprecedented funding to rebuild the territories. That temporary increase in cover over expired in December of 2021. As some may recall, the rum cover over cap issues were included in the Build Back Better legislation. Unfortunately, that entire legislation did not make it through the Senate.
I and my colleague, Congresswoman Jenniffer Gonzalez-Colon have offered legislation to lift the cap permanently through H.R. 1425. We are confident that until such permanency becomes law, when tax extender legislation is taken up in this Congress, as has happened previously, the additional rate (bringing the cover over to $13.25) will be given for the period of the tax extender and the additional funds will be given retroactively to the Virgin Islands Government going back to the last expiration. My confidence that such tax extender legislation will be taken up comes from the many tax credits and other tax provisions that have or will expire by the end of this year that need to be extended – such as low-income housing credits, pharmaceutical company credits and others.”
Plaskett also stated the following, regarding reports that this money has been lost to GERS:
“I believe it may have been more fiscally prudent to have used the rum cover over amount at the $10.50 for recent bonding or valuation purposes, recognizing that the cap was expiring in December. As a member of the Ways and Means Committee, which has jurisdiction over all tax-writing measures, we would have been happy to share our evaluation of the legislative process and dates of expiration. Be that as it may, we are where we are now and I’m happy to work with all parties to support our Virgin Islands’ financial needs and believe that through the extender process we will get the $13.25 rate and retroactive funding.
“Additionally, while I know we are in a heightened political season, it is disappointing when those who are supposed to be legislators do not do the work of legislators but merely act as alarmists, frightening Virgin Islanders rather than doing the research to understand the federal legislative history and process or picking up the phone and calling my office to ask for an explanation.”
“As I stated earlier, I am confident the tax extender legislation will bring us to the $13.25 rate and bring retroactive funds to GERS, and I welcome the support of my fellow elected officials to work together to amplify and support the needs of our fellow Virgin Islanders.”