Explanatory Memorandum to COM(2001)347 - Authorisation of France to extend the application of a reduced rate of excise duty on "traditional" rum produced in its overseas departments - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2001)347 - Authorisation of France to extend the application of a reduced rate of excise duty on "traditional" rum produced in its ... |
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| source | COM(2001)347  |
| date | 28-06-2001 |
By Council Decision of 30 October 1995, which expires on 31 December 2002, France was authorised to apply a reduced rate of excise duty in metropolitan France on 'traditional' rum produced in its overseas departments (OD). The authorisation was based on the need to safeguard the vital interests of Community rum producers. The view held was that only tax measures, in this case reduction of the excise duty, could provide an immediate answer to the problem of maintaining a 'trade slot' for rum from the OD until the measures to support the cane-sugar-rum sector took effect, account also being taken of the consequences of abolishing tariff quotas.
Given the review of the sugar common market organisation (CMO) in 2001 and the dismantling in 2003 of customs protection for spirits, the Community and national measures taken to improve the competitiveness of the cane-sugar-rum sector do not in themselves make it possible to reach a level of competitiveness which would allow France to adapt taxation on traditional rum produced in its overseas departments.
In its memorandum concerning the measures to be taken under Article 299 i of the Treaty establishing the European Community on the outermost regions, France therefore considered that it was essential to maintain, after 31 December 2002, the tax arrangements applicable to 'traditional' rum from the OD. In view of the competition from 'traditional' rum from other countries, this tax instrument was the only means by which this particular type of rum could keep its market share in mainland France. This market share (over 50% of production) is essential to the survival of the overseas departments' rum-producing industry, which, given the size of the turnover and the number of jobs in the cane-sugar-rum sector, plays an essential role in maintaining the economic and social balance of those departments.
In view of the need to create for the traders concerned the climate of security needed for investment to modernise their activities, France also considers that the special tax arrangements should be kept in place for a long period, and that an evaluation report should be compiled to prepare for the extension or adjustment of the measures. The Commission is proposing a seven-year extension, from 1 January 2003 to 31 December 2009, accompanied by the obligation for France to compile an evaluation report, that will enable the Commission to assess, while the tax arrangements are being applied, whether the reasons justifying the granting of the reduced rate still exist.
Comments on the proposed measures
Article 1 authorises France to apply a reduced rate of excise duty in metropolitan France on 'traditional' rum produced in its overseas departments.
Article 2 defines the concept of 'traditional' rum.
Article 3 limits the application of the reduced rate in metropolitan France to an annual quota of 90 000 hl of pure alcohol, calculated on the basis of the average quantities registered in recent years; this Article also determines the extent of the reduction.
Article 4 determines the period for which the decision applies; a mid-term evaluation report will be requested in order to check whether the reasons which justified the granting of the present derogation still exist.
Article 5 is purely formal.