The move is the latest salvo by the NPRC on behalf of Puerto Rico in its continuing battle with the U.S. Virgin Islands over the use of rum rebate funds.
     
     "We hope the new Congress brings forth more fiscally responsible actions in order to limit what clearly has become a corporate welfare program for rum producers, foreign and domestic," said NPRC President & CEO Rafael Fantauzzi.
     
     The so-called "rum war" erupted after the U.S. Virgin Islands struck a deal with British company Diageo, the parent company of Captain Morgan rum, which will transfer its operations to the USVI from Ponce in 2012, costing Puerto Rico about $6 billion in lost revenue over 30 years and the loss of 320 jobs.
     
     The USVI then made a similar deal with Fortune Brands, the maker of Cruzan rum and Jim Beam bourbon. The subsidies are funded through the $13.50-per-proof-gallon federal tax on rum distilled in each territory and in foreign countries, most of which is refunded back to Puerto Rico and the USVI.
     
     Puerto Rico has cried foul because the deals call for heavy subsidies to the rum makers funded by the rebate program. They amount to about 50 percent of the rum rebate revenue the USVI will receive as more rum producers move to the territory. Puerto Rico uses about 6 percent of the rum rebate revenue to promote island rum.
     
     Resident Commissioner Pedro Pierluisi filed legislation that would cap the subsidies to rum makers at 10 percent of the total amount of rebate revenue the territories receive, and U.S. Sen. Bob Menéndez, D-N.J., filed similar legislation in the Senate, but Congress has declined to act.
     
     Puerto Rico says the subsidies, which represent about half the rum rebate the USVI receives, represents unfair competition to its rum makers and the island will be forced to follow suit in order to protect this important industry.
     
     "We told the current Congress and the administration that their act of omission on placing a cap of 10 percent on any corporate subsidy would initiate cannibalization of the program," said NPRC Chairman Miguel Lausell. "The irresponsible actions by the U.S. Virgin Islands are forcing the government of Puerto Rico to act in self defense in order to prevent further unemployment and economic turmoil."
     
     Last week, the local Senate approved a bill that will increase the cap on rum rebate funds the government of Puerto Rico can use to promote the local rum industry to 25 percent from 10 percent. The measure also gives the governor the discretion to increase this percentage up to 46 percent if Congress does not impose, before December 31, 2011, a cap on the amount of subsidies that a U.S. jurisdiction can give a rum producer out of the federal rum excise tax cover-over program.
     
     NPRC officials are concerned that members of Congress, looking to cut federal spending, will see the rum cover-over program as another example of corporate welfare, ripe for cutting during times of fiscal hardship.
     
     In midterm elections this month, the Republican Party won control of the U.S. House and weakened the Democratic Party’s hold on the Senate.
     
     "Thanks to the U.S. Virgin Islands, members of Congress that seek to find and eliminate government waste will be able to notice at least $529 million yearly from the rum cover-over program to cut,"Fantauzzi said.