S.1938 - To amend the Internal Revenue Code of 1986 to modify the cover over of certain distilled spirits taxes. (119th Congress)
Summary
S.1938 aims to amend the Internal Revenue Code of 1986, specifically concerning the cover-over of certain distilled spirits taxes. The bill seeks to repeal the limitation on cover-over taxes to Puerto Rico and the Virgin Islands. It also mandates a transfer from Puerto Rico's rum tax revenues to the Puerto Rico Conservation Trust Fund.
This transfer is specified as a portion of the rum taxes covered over at a rate equal to or greater than $10.50 per proof gallon. The funds are intended for conservation efforts within Puerto Rico.
Finally, the bill addresses the retroactive application of rules related to the determination of cover-over, clarifying the effective dates of previous amendments.
Expected Effects
The bill will likely increase funding for conservation efforts in Puerto Rico through the dedicated transfer of rum tax revenues. It will also remove existing limitations on tax cover-overs to Puerto Rico and the Virgin Islands, potentially altering their revenue streams.
Clarifying the retroactive application of certain tax rules will provide greater certainty for affected parties. The changes could impact the economies of Puerto Rico and the Virgin Islands, depending on the overall effect on their distilled spirits industries.
Ultimately, the bill seeks to balance economic considerations with environmental conservation in Puerto Rico.
Potential Benefits
- Increased funding for the Puerto Rico Conservation Trust Fund, supporting environmental conservation and restoration efforts.
- Potential for economic benefits in Puerto Rico and the Virgin Islands through the removal of limitations on tax cover-overs.
- Clarification of tax rules, providing greater certainty for businesses and governments.
- Support for sustainable agriculture efforts in Puerto Rico through the Conservation Trust Fund.
- Reforestation and restoration of Puerto Rico's natural habitats.
Potential Disadvantages
- Potential reduction in funds available for other essential services in Puerto Rico, as a portion of rum tax revenues is directed to the Conservation Trust Fund.
- Possible economic disruption in Puerto Rico and the Virgin Islands if the changes to tax cover-overs have unintended consequences.
- The specific formula for transferring funds to the Conservation Trust Fund could be subject to interpretation and potential disputes.
- The bill's reliance on rum tax revenues makes the Conservation Trust Fund vulnerable to fluctuations in the rum market.
- The bill does not address broader economic challenges facing Puerto Rico and the Virgin Islands.
Constitutional Alignment
The bill appears to align with the General Welfare Clause of the US Constitution (Preamble), as it aims to promote conservation and economic stability in Puerto Rico. Congress has the power to lay and collect taxes and provide for the general welfare of the United States.
The bill also falls under Congress's power to make all needful rules and regulations respecting the territory or other property belonging to the United States (Article IV, Section 3, Clause 2), given the relationship between the US and Puerto Rico.
There are no apparent violations of individual rights or freedoms guaranteed by the Constitution or its amendments.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).