USVI Receives $181 Million in Rum Tax Remittance, Down From Previous Years Due to Reduced Tax Rate

U.S. Virgin Islands receives $181 million in rum tax revenue, marking a decrease from previous years due to lower tax rate of $10.50 per proof gallon—a drop from $13.25—resulting in a loss of $47 million in funding

The U.S. Dept. of Interior announced Thursday that the U.S. Virgin Islands has received an advance payment of $181,068,638 in rum excise tax remittances from the Office of Insular Affairs (OIA), marking a significant source of revenue for the territory. However, this amount reflects a drop from previous years when the remittances were calculated at a higher tax rate of $13.25 per proof gallon of rum. Currently, the territory receives the funds at a tax rate of $10.50 per proof gallon, resulting in a lower payout.

If the U.S. Virgin Islands had continued to receive the rum excise taxes at the previous rate, the territory would have garnered approximately $228.49 million, representing a difference of about $47.42 million. The rum tax remittances play a crucial role in supporting the territory’s bond covenants as well as the securitization of Government Employees' Retirement System. Therefore, any reduction in these payments can have lasting impacts.