By Christopher McCollum
It was reported several months ago that the producer of Captain Morgan Rum, Diageo PLC (NYSE: DEO), was going to be getting a new factory in the U.S. Virgin Islands, along with $2.7B USD in tax credits and benefits over the next 30 years, which sparked a bit of controversy as they are a British owned company. With this struck deal, Diageo will be moving the Captain Morgan operations from Puerto Rico, where they’ve been operating for generations, to St. Croix in the Virgin Islands, while potentially putting the rum culture in jeopardy.
Puerto Rican representatives claim that this business move will cost Puerto Rico about $120M annually in lost tax revenue, which at this point in time is an even harder pill to swallow than in the past. In March of 2009, Puerto Rico’s governor, Luis Fortuno, declared that the government there is bankrupt, with a deficit of more than $3B USD, making it the highest deficit-per-capita in the United States. Over the ensuing months, there have been plans implemented to lay off potentially 30,000 government workers, and to slash salaries across the board in an effort to save money. Union protests have been going on all over San Juan’s financial districts, and the unemployment rate on the Island of Enchantment will soar to potentially 17%.