The cover-over provisions for rum extend as far back as 1917 for PR and 1954 for the USVI. Annual cover-over revenues in FY2011 were $449.0 million for PR and $133.5 million for the USVI. The congressional debate on this legislation could also lead to debate on the broader issue of the cover-over program more generally. In the 112 th Congress, legislation has been introduced to expand federal control over the use of covered-over revenue. Passage of H.R. 1883 (or similar legislation, S. 986 ) would result in limits on Puerto Rico's and the USVI's ability to use covered-over revenue to subsidize the rum industry in the islands. The legislation is likely in response to the recent economic development initiatives in the USVI financed in part by rum cover-over revenue. The President's FY2013 budget proposal includes an extension of the $13.25 cover-over, as does S. 3521 . Cover-Over Revenue

In FY2011, PR received $449.1 million in covered-over revenue from domestic production and other country imports into the United States, combined. The Use of Cover-Over Revenue

Puerto Rico uses cover-over revenue to finance marketing and promotional activities for the rum industries. Departments of the Treasury and the Interior to the USVI and PR to directly and indirectly support the rum industry. 4578 , to require the Unite States to pay to the Virgin Islands the full amount of excise taxes imposed on rum produced in the Virgin Islands.
Under current law, the excise tax on rum is $13.50 per proof gallon and is collected on rum produced in or imported into the United States. Through 2011, $13.25 per proof gallon of imported rum is transferred or "covered over" to the Treasuries of Puerto Rico (PR) and the United States Virgin Islands (USVI). In FY2011, PR received over $449.0 million in revenue and the USVI received over $133.5 million. The law does not impose any restrictions on how PR and USVI can use the transferred revenues. Both territories use some portion of the revenue to promote and assist the rum industry.
The cover-over provisions for rum extend as far back as 1917 for PR and 1954 for USVI. Recently, the United States Virgin Islands has dedicated a larger share of current and future covered-over revenue to help finance public and private infrastructure that would directly benefit the rum industry.
In the 112th Congress, legislation has been introduced to expand federal control over the use of covered-over revenue. Passage of H.R. 1883 (or similar legislation, S. 986) would result in limits on Puerto Rico's and the USVI's ability to use covered-over revenue to subsidize the rum industry in the islands. The legislation is likely in response to the recent economic development initiatives in the USVI financed in part by rum cover-over revenue. The President's FY2013 budget proposal includes an extension of the $13.25 cover-over, as does S. 3521.
This report provides a history and analysis of the rum cover-over program and current legislative efforts to modify the program. The congressional debate on this legislation could also lead to debate on the broader issue of the cover-over program more generally. This report will be updated as legislative events warrant.