Economic Columnist – Edwin Laurent CMG OBE
Help for US Rum Distillers, but Caribbean Pays
The Caribbean rum industry has for quite some time now been objecting to the extensive tax breaks that the US offers to rum producers that set up distilleries in Puerto Rico and the US Virgin Islands. These tax breaks are funded by an excise tax of US$13.50 per proof-gallon on rum.
CARIFORUM rum producers have argued that the substantial support gives an unfair market advantage to distillers like Diageo and others that operate from these US territories.
Rum is CARICOM’s largest agriculture-based export industry, generating an estimated US$500m in foreign exchange. The Caribbean producers claim that their currently significant share of the US market could be wiped out by the subsidised product.
Govenor John P. de Jongh, Jr. Photo courtesy governordejongh.com
Like so many observers around the world, Caribbean rum producers anxiously awaited the outcome of the ‘fiscal cliff’ debate in the US Congress and would have carefully scrutinized the final package. Some might have harboured a faint hope that the last-minute budget deal would have scrapped the excise tax on rum thereby forcing the end of the support programme. If so they would have been bitterly disappointed; Congress extended the arrangement by a further two years.
The revenue going to the treasuries of these US territories is quite substantial. According to a 2010 report by the Congressional Research Service, Puerto Rico’s share was US$371 million from the tax in 2008, while the US Virgin Islands received almost US$100 million.
In a statement released on 3rd January 2013, USVI Governor John P. de Jongh, Jr expressed gratitude that the rum excise taxation programme was extended, claiming that it is critical to their rum industry.
LIAT’s new shareholder
Prime Minister Roosevelt Skerrit. Photo courtesy thehabarinetwork.com
The loss-making inter-island air carrier, LIAT has a new shareholder, the Government of Dominica, which attended its first shareholders’ meeting at the end of December after making an initial payment of three million East Caribbean dollars to the Antigua-based airline. Dominica joins the other shareholder governments of Antigua and Barbuda, St. Vincent and the Grenadines and Barbados.
According to Dominica’s Prime Minister Roosevelt Skerrit, the payment “will go towards our contribution and participation in the redevelopment of LIAT”. He sees the move as a means of “safeguarding and protecting the investments the government has made in tourism.”
In 2010, LIAT recorded losses of EC$20.2 million, which increased to EC$43 million in 2011 and according to its chief executive officer Ian Brunton, the airline is expected to record EC$23 million in losses to the end of 2012. However he projected “to reverse its current losses and record a profit of EC$7 million in 2013”.
Guyanese Rice Doing Well
Photo courtesy un.org
Guyana has had a bumper year for rice last year producing in excess of 420,000 tonnes, surpassing the target of 412,000 tonnes and the 2011 levels of 402,000 tonnes.
Almost three-quarters of Guyana’s rice is exported. Venezuela has recently been taking in considerable amounts of paddy and other rice, with the balance going to traditional markets in Europe and CARICOM. Such buoyant exports are an important source of foreign exchange for the country.
The Ministry of Agriculture praised this as a remarkable achievement by Guyana’s rice farmers though suggesting that the situation could have been even better. It pointed out that “the first crop of approximately 4,000 was affected by flooding in some rice cultivating areas.”
Talking up the CSME
Freundel Stuart. Prime Minister Photo courtesy nationnews.com
Speaking at the opening of the Office of Trade Negotiations, the CSME Unit and the CARICOM Development Fund Barbados Prime Minister Freundel Stuart who has lead responsibility for the CARICOM Single Market and Economy (CSME) complained that there is still much more work to be done to ensure a seamless, balanced Caribbean Community.
He sees the need for a clear vision of regional integration and called on his fellow leaders to “continually show our commitment to regional unity and integration, and love for CARICOM, across and beyond the span of regional institutions, as we urge the people of the region to have faith in our beliefs”.
He warned that “Sentimentality is not the anchor of our integration system. There are clear developmental priorities that must be addressed collectively”. It though was not clear what concrete plans he or CARICOM have to address and overcome the underlying economic, social and institutional impediments to closer regional integration.
A Generous Diva
Popstar Rihanna showed her massive generosity with a donation of three and a half million Barbados dollars (US$1.75 million) to Barbados’ Queen Elizabeth Hospital in honour of the memory of her late grandmother, Clara “Dolly” Brathwaite. She was at the time back home for a break with family and friends, but cut short her holiday and returned to the United States on Christmas Eve.
