photo by Brandon King/Flickr, used under a Creative Commons license Historically speaking, rum’s been implicated in some dastardly things – brutal hangovers, not to mention slavery.

 Rum tariffs have also had serious policy implications – like the American Revolution. Wayne Curtis’s excellent book And a Bottle of Rum: A History of the New World in Ten Cocktails describes how the Sugar Act, passed by the British Parliament in 1764 to raise revenues for the protection of the colonies, led to the Revolution, quite probably: The Sugar Act led to molasses – and therefore rum, a favorite beverage among residents of the colonies – being harder to come by in the New World. Rum being harder to come by in the New World led to rebellion. Rebellion of course led to revolt, which led to the Revolutionary War. Paul Revere is said to have fortified himself with rum on the night of his most famous ride.

 Now Puerto Rico and the Virgin Islands are engaged in their own skirmish over rum tariffs, which could have pressing policy and taste implications.

 Puerto Rico and the Virgin Islands – both U.S. territories, neither paying U.S. income taxes – are the beneficiaries of a rum excise tax “cover-over,” under which all excise taxes collected on rum imported into the mainland United States are remitted back to these territories.

 Where the rum comes from makes a difference as to how much each territory collects. While taxes on rums coming from most parts of the world are shared between Puerto Rico and the Virgin Islands, taxes on rums coming from Puerto Rico are returned only to Puerto Rico; taxes on rums coming from the Virgin Islands are returned only to the Virgin Islands.

 Puerto Rico, which began receiving cover-over money in 1917, now has four rum-makers, including Captain Morgan and Bacardi, the world’s two biggest rums; the Congressional Budget Office reports that Puerto Rico received over $371 million in cover-over money in 2008. The Virgin Islands, which was included in the cover-over starting in 1954, has just one distillery for now; cover-over remittances brought the Virgin Islands about $100 million in 2008.

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