Deal gives tax credits to Diageo, maker of Captain Morgan By Tom Hamburger and Peter Wallsten, Tribune Newspapers|September 01, 2009 WASHINGTON -- Yo-ho-ho and a bottle of rum. With little fanfare, a deal is moving forward to direct billions in U.S. tax dollars to an unlikely beneficiary -- the giant British liquor producer that makes Captain Morgan rum. Under the agreement, London-based Diageo PLC will receive tax credits and other benefits worth $2.7 billion over 30 years, including the entire $165 million cost of building a state-of-the-art distillery on the island of St. Croix in the U.S. Virgin Islands. Virgin Islands officials say the arrangement complies with the letter and spirit of tax law and will help the islands' sagging economy. The islands are a U.S. territory. Captain Morgan is now produced in Puerto Rico, a U.S. commonwealth, and critics say the subsidy for the new distillery in the Virgin Islands, along with the other benefits, are so generous that they practically guarantee a profit on every gallon of rum produced there by Diageo, the biggest distilled spirits maker in the world. "The U.S. taxpayer is basically being asked to line the pockets of the world's largest liquor producer," said Steve Ellis, the vice president of Taxpayers for Common Sense, a nonpartisan watchdog organization. With the exception of Ellis and a handful of lawmakers, however, the deal has attracted little opposition in Congress or elsewhere. Treasury Secretary Timothy Geithner has said he does not have authority to block or investigate the project. Criticism on the Hill has been confined to a small group that includes Republican Reps. Dan Burton of Indiana and Darrell Issa of California, plus a handful of Democrats with large Puerto Rican constituencies. The key to the deal is a special tax collected on every bottle of rum sold in the United States -- some $470 million a year. The tax was first imposed in 1917, and most of the money is funneled back to the governments of rum-producing U.S. territories in the Caribbean to help create jobs, pay for local government services and promote consumption of rum. Puerto Rico, which requires that 90 percent of its rum tax money be used for the public welfare on the island, says it has had as many as 300 workers making Captain Morgan and many if not all those jobs will disappear if Diageo moves its operations to the Virgin Islands. "It's insulting that the money we give is essentially paying for a foreign corporation to move from one U.S. location to another, while cutting jobs," Ellis said. more British distiller gets billions for rum<br/>Deal gives tax credits to Diageo, maker of Captain Morgan - Orlando Sentinel Looks like it's time to KILL THE CAPTAIN.