A $6 Billion Tax Subsidy To a British Company in Exchange for 40 Jobs? Deposada Comments on The latest chapter in Congressional Waste, Abuse and Corruption

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Sep 08, 2010, 06:54 ET

WASHINGTON, Sept. 8 /PRNewswire/ -- The U.S. Virgin Islands (USVI), aided and abetted by Congressman Charlie Rangel, has awarded the wealthy British liquor conglomerate, Diageo, a $6 billion deal to produce rum in their territory. This is one of the most outrageous gifts to a foreign company at the expense of US taxpayers. "This sweetheart deal is nothing more than a 'kick-back' program that gives Diageo a huge financial payday in exchange for being required to hire only 40 employees," said Robert Deposada, President of Latinos for Reform.

"This deal pays this British conglomerate two times the cost of producing the rum! That means that they could sell the rum for one cent plus the excise tax and still make a lot of money!" Deposada added. American manufacturers of bourbon and whiskey do not enjoy the same sweetheart tax breaks and ingredients subsidies and, in fact, would be undermined if USVI rum producers decided to engage in a liquor price war.

The House Committee on Standards of Official Conduct and the U.S. Department of Justice need to investigate the possible corruption and abuse in this deal. First, the House Committee should ask Charlie Rangel and his close ally Rep. Donna Christensen (USVI), under oath, if they will be receiving benefits from this sweetheart deal in the years to come. Also, the U.S. Department of Justice investigate whether key players behind this sweetheart deal, from the corrupt USVI Governor all the way to Congressman Rangel and his allies, will receive golden parachutes after all components of this deal are in full effect?

Second, why is Wall Street giddy over the bond deal to raise the initial $250 million to build the distillery for Diageo, when the Virgin Islands makes California look fiscally responsible? Why would the financial analysts believe that there are almost no chances for the Cover Over tax subsidy to be limited or capped in this Congress? The fact is that legislation (H.R. 2122) was introduced before Congress to limit the amount of the tax subsidy revenue that can be paid directly to a rum producing company. The only way analysts would come to that conclusion is if they received private assurances directly from the House Ways and Means Committee then-Chairman Charlie Rangel that no legislation that could affect this subsidy would see the light of day in his committee.

"Considering the initial gifts of the $250 million state-of-the-art distillery, the $50 million 'start-up' funding, the 50 percent Cover Over tax subsidy kick-back, all additional local tax incentives, and the unbelievable subsidy on molasses, one can only conclude that this $6 billion largesse was designed to only benefit the British liquor conglomerate -- at the expense of U.S. taxpayers," Deposada concluded.

For more information, visit http://www.newpatriotjournal.com/Articles/Did_Charlie_Rangel_Double_Cross_American_Taxpayers

SOURCE Latinos for Reform