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Parliament endorses reduced excise duty on rum from French overseas departments
Brussels, 25 September. A proposed Council Decision authorising France to charge a reduced rate of excise duty on rum distilled in its overseas departments has been endorsed by Parliament in plenary session on 25 September (report by Gerardo Galeote, EPP-ED, ES, approved in committee on 12 September). This rum cannot compete on Community market unaided, due inter alia to rising wage costs and to the need to recoup investments made to meet Community standards on emissions and safety.
Reduced-rate quota
The proposal would authorise France to charge a reduced rate of duty on a quota of 108,000 hectolitres pure alcohol (HPA) from 1 January 2007 to 31 December 2012. This would replace a current quota of 90,000 HPA, which has been used up. The current quota represents less than 8.68% of the Community market, and the proposed 18,000 HPA increase concerns no more than 1.5% of that market for a six-year period.
Wage and compliance costs
The minimum hourly wage in the overseas departments rose 24% in 2001-2006. These departments have invested over €45.5 million since 2001, including €21.3 million (47%), on environment protection measures. Distilleries can offset compliance costs only by shipping more rum to the Community market.
Consumption and market shares
Whereas rum consumption in France rose 20% overall in 2000-2005, the overseas departments' market share rose only 16%, constituting a relative decline in the market. These departments' distilleries sell over 50% of their output to mainland France and their share of the total Community market is currently about 20%.
Turnover and jobs
In Réunion, Guadeloupe and Martinique, the sector generates an annual turnover of €250 million and provides some 40,000 jobs, 22,000 of them directly. The French authorities estimate that removing the reduced rate would result in a loss of 50% to trade outlets (mainly in mainland France) and thus in the closure of 75% of the distilleries. The reduced rate system allows for the maintenance of 11 distilleries in Guadeloupe, 9 in Martinique, 3 in Réunion and one in Guyana.
Proposal from the Commission for a Council Decision authorising France to apply a reduced rate of excise duty on "traditional" rum produced in its overseas departments and repealing Council Decision 2002/166/EC of 18 February 2002
http://eur-lex.europa.eu/LexUriServ/site/en/com/2007/com2007_0318en01.pdf
Text adopted by the European Parliament