EEC, authorising France to prolong the application of lower rates of excise duty to tobacco products released for consumption in Corsica - Main contents

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dossier	COM(2003)186 - Amendment of Directives 92/79/EEC and 92/80/EEC, authorising France to prolong the application of lower rates of excise duty ...
document	COM(2003)186
date	December 5, 2003

(1) By the provisions of Council Directive 92/79/EEC of 19 October 1992 on the approximation of taxes on cigarettes(3) and Council Directive 92/80/EEC of 19 October 1992 on the approximation of taxes on manufactured tobacco other than cigarettes(4), France was authorised to continue applying up to 31 December 2002 the same rates for cigarettes and tobacco products sold in Corsica as those in force on 31 December 1997.

(2) Taking the view that more time was needed to bring the taxes applied to manufactured tobaccos in Corsica into line with the taxes applicable on the mainland, France requested, in particular, in a memorandum dated 26 July 2000 pleading recognition of Corsica's special position as an island within the European Union ("Pour une reconnaissance de la spécificité insulaire de la Corse dans l'Union européenne"), authorisation to prolong until 31 December 2009 the application of certain tax rules derogating from the Community's requirements regarding the taxation of tobacco products.

(3) The economic activity linked with manufactured tobaccos helps maintain economic and social equilibrium in Corsica. This is because the said activity provides a livelihood for some 350 retailers who employ about the same number of wage earners. Quite a large proportion of these retail outlets are in the sparsely populated mountain areas where they provide a neighbourhood service and thereby help indirectly to keep the population from moving away.

(4) Immediate and complete alignment with the tax rules for tobacco in mainland France would depress economic activity linked to manufactured tobacco in Corsica which, at present, provides the abovementioned jobs.

(5) Therefore, to prevent damage to the island's economic and social equilibrium, it is both essential and justifiable to grant a derogation with effect from 1 January 2003 to 31 December 2009, by which France may apply a rate of excise duty that is lower than the national rate to cigarettes and other manufactured tobaccos released for consumption in Corsica.

(6) By the end of this derogation period the tax rules for manufactured tobaccos released for consumption in Corsica must have been brought fully into line with the rules for mainland France. Nevertheless, too abrupt a change should be avoided and there should therefore be an intermediate increase in the excise duty currently levied on cigarettes in Corsica.

(7) To avoid undermining the smooth functioning of the internal market, the volume of cigarettes eligible for this derogating measure should be limited to an annual quota of 1200 tonnes.

(8) Directives 92/79/EEC and 92/80/EEC should accordingly be amended.