The U.S. Department of Interior announced on 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), indicating a vital revenue source for the territory.

However, this amount shows a decline from previous years when the remittances were made using a higher tax rate of $13.25 per proof gallon of rum. Nowadays, the territory receives these funds at a tax rate of $10.50 per proof gallon, leading to reduced remittances.

Had the U.S. Virgin Islands continued to receive the rum excise taxes at the former rate, the territory would have amassed approximately $228.49 million, showing a shortfall of about $47.42 million. These rum tax remittances are critical in supporting the territory’s bond covenants and the securitization of the Government Employees’ Retirement System, with any reductions potentially having profound effects.

Delegate to Congress Stacey Plaskett, who has long vowed to address this issue and introduced legislation with her colleagues towards this cause, later commented to the Consortium that Republican intransigence was to blame for the prolonged delay of the effort.

The OIA collaborates with the U.S. Department of the Treasury to facilitate swift transmission of funds, noted by Assistant Secretary for Insular and International Affairs Carmen G. Cantor. Each year, the GVI provides an estimation of rum excise taxes to set the basis for advanced payments for the next fiscal period. These amounts are adjusted according to the actual receipts recorded by the federal government.

Guam Receives $76 Million in Section 30 Funds

The Office of Insular Affairs has also allocated $76,402,101 to Guam in a different transaction. This amount includes federal income taxes gathered from U.S. military personnel and retirees living in Guam under the Organic Act of Guam’s provisions. Similar to the U.S. Virgin Islands, Guam gets a yearly advance from the OIA that is later adjusted based on the actual federal income tax collection.

These transfers are crucial for supporting the governmental operations and local services in Guam, helping the territory fulfill its commitments to its citizens. The OIA expressed its ongoing dedication to managing these payments and upholding the economic health of the U.S. territories.