Opinion of the European Economic and Social Committee on the "Proposal for a Directive of the Council amending Directive 92/79/EEC and 92/80/EEC, authorising France to prolong the application of lower rates of excise duty to tobacco products released for consumption in Corsica" (COM(2003) 186 final — 2003/0075 (CNS))
Date: 2003-07-16
Institutions: European Economic and Social Committee
Subjects: Corsica, consumer price, derogation from EU law, excise duty, tax harmonisation, tobacco

30.9.2003

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Official Journal of the European Union

C 234/49

2.25.
The EESC’s work in this field could also explore the
functionality, simplification and transparency of the processes
In addition it should include an unprecedented
involved.
analysis of the likely challenges arising from enlargement, as
well as outlining trends in the factors determining genuine
convergence, notably the so-called ‘dynamic competitiveness
factors’, and ways to stimulate them.

2.26.
Lastly, the EESC considers it vitally important for the
Commission to give serious thought to the possibility that
there might not be enough funds to maintain the Community’s
cohesion policy at current levels, which could mean a need to
keep up cohesion policy efforts for much longer, entailing
higher costs and poorer results for which public opinion might
have much less understanding.

Brussels, 16 July 2003.

The President

of the European Economic and Social Committee

Roger BRIESCH

Opinion of the European Economic and Social Committee on the ‘Proposal for a Directive of the
Council amending Directive 92/79/EEC and 92/80/EEC, authorising France to prolong the
application of lower rates of excise duty to tobacco products released for consumption in
Corsica’

(COM(2003) 186 final — 2003/0075 (CNS))

(2003/C 234/13)

On 5 May 2003, the Council decided to consult the European Economic and Social Committee on the
above-mentioned proposal.

The Section for Economic and Monetary Union and Economic and Social Cohesion, which was
responsible for preparing the Committee’s work on the subject, adopted its opinion on 23 June 2003.
The rapporteur was Mr Burani.

At its 401st Plenary Session on 16 and 17 July 2003 (meeting of 16 July), the European Economic and
Social Committee adopted the following opinion by 107 votes to four, with eight abstentions.

1. Gist of the Commission proposal

The proposal concerns a request

from France to
1.1.
prolong until 31 December 2009 the derogation allowing the
application of a lower excise duty on tobacco products in
Corsica than that applied in mainland France. The derogation
was granted in a statement in the Minutes of the Council
meeting that adopted Directive 92/79/EEC on cigarettes and
Directive 92/80/EEC on manufactured tobacco other than
cigarettes. It was originally granted until 31 December 1997,
subject to the excise duty applicable in Corsica being gradually
raised to the national level by that date, and was extended once
more to 31 December 2002, at the request of France, in
Directive 1999/81/EC.

the

aside

Leaving

involved

technicalities

1.2.
in
implementing the directives, which are only a minor consider-
ation in examining the request, the derogation would mean
that the retail price of cigarettes in Corsica would be one third
lower than in mainland France, whereas cigars, cigarillos and
manufactured tobacco other than cigarettes would be 15 %
cheaper.

1.3. When it submitted the request, France also presented a
package of tax measures it intends to introduce in order to
bring excise duty on tobacco in Corsica gradually in line with
that imposed in the rest of the country by the end of the
transitional period requested.

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1.4.
The request for a prolongation of the derogation is
based on a Memorandum of 26 July 2000 pleading recognition
of Corsica’s special position as an island within the European
Union, and a subsequent letter dated 5 November 2002, which
deemed the prolongation necessary in order to protect island
jobs in the production and distribution of manufactured
tobaccos.

1.5.
France states that 53 people are employed in cigarette
manufacturing in Corsica, and that the additional margin
resulting from the application of the derogating tax provisions
would compensate for the lower output and higher cost of
producing cigarettes in Corsica, owing to the isolation and
topography of the island, and resulting in higher manufactur-
ing and distribution costs.

regard

to distribution,

some
1.6. With
350 retailers who are said to employ almost the same number
of shop assistants, mainly in the four to five-month tourist
season. They provide a neighbourhood service, including in
sparsely populated mountain areas, thereby helping indirectly
to keep the population from moving away.

there

are

At a meeting between the Commission and the French
1.7.
Government,
it was agreed that immediate and complete
alignment with the tax rules for tobacco in mainland France
‘could undermine Corsica’s economic and social equilibrium’.
A package of measures for gradual alignment has therefore
been proposed:

— until 31 December 2007 the total rate of excise duty
applicable to cigarettes, up to a quota of 1 200 annual
tonnes, will be 35 % of the price charged for cigarettes of
the most popular price category in Corsica; subsequently,
and until 31 December 2009, the rate will rise to 44 %,
and then be aligned with the excise rate applied on the
mainland (currently 58,99 %);

— for cigars and ‘other tobacco products’, there is a relief
package of related measures that are differentiated accord-
ing to type of product, to be applied until 31 December
2009, after which national rates will apply.

2. Comments

2.2.
The Commission document, which reproduces data
provided by the interested party, states that 1 200 tonnes of
tobacco (in cigarettes alone) is sold in Corsica every year. With
a population of less than 260 000 inhabitants, and taking into
account children and a presumable number of non-smokers,
every smoker on the island would seem to be smoking almost
8 kilos of cigarettes each. This quantity diminishes when the
four to five-month tourist season is taken into account
(although not all the tourists will be smokers, of course). Even
with this correction, the quantity of cigarettes sold appears to
be considerably higher than the actual smoking capacity of
residents and tourists.

2.3.
It must therefore be assumed that a certain quantity of
cigarettes (and probably other types of manufactured tobacco,
for which no figures have been provided)
is destined for
‘export’ to the mainland. In its opinion (1) on the proposal for
a Council directive (2), the EESC pointed out that cross-border
purchases of tobacco were perfectly legal, as long as the
quantities stipulated in Directive 95/12/EC were respected.
However, in view of the presumably considerable quantities
it must be
not destined for consumption on the island,
wondered whether the directive is genuinely complied with,
and whether any type of illicit trade might be going on. This
— albeit arbitrary — suspicion would not seem wholly
unreasonable.

At any rate, whether the tobacco leaves the island
2.4.
legally or otherwise, the revenue losses for the French state
ought to be considerable. Alongside this lost revenue, we are
asked to consider keeping 53 people employed in manufactur-
ing cigarettes, although their output can hardly be expected to
meet actual needs. Leaving aside the alleged higher production
costs, it seems debatable whether the distribution costs referred
to in the Commission document are higher for cigarettes
produced in Corsica than for those that have to be shipped or
flown in from the mainland.

2.5.
The claims regarding distribution would also seem
to be open to question. No retailer sells only cigarettes.
Consequently, the 350 retailers it is claimed take on staff to
cope with increased sales (almost 350 people, according to the
document) do so, fortunately, for completely different reasons
than tobacco sales. It should also be noted that, according to
the third recital of the directive, most of the retailers are to be
found in sparsely populated mountain areas. Sadly for them,

2.1.
This matter, while in itself not particularly significant
in terms of overall revenue from tobacco duty, nevertheless
raises a few important problems of principle and of substance.
The EESC would draw the attention of the Commission and of
the Council to some points that perhaps warrant further
consideration.

(1) OJ C 36 of 8.2.2001, p. 111.
(2) COM(2001) 133 final

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they are unlikely to experience sales volumes that would force
them to take on outside help, in addition to that provided by
the family.

2.6.
All things considered, the EESC feels that the exemp-
tion measures are only marginally warranted by the need,
referred to in the fifth recital, ‘to prevent damage to the island’s
economic and social equilibrium’. Furthermore, it cannot fail
to point out that the circumstances described in the French
Government’s document, and repeated in the Commission
document, regarding ‘Corsica’s special position as an island’
and the problems raised by the ‘isolation and topography of

the island’ are common to almost all
sometimes more acutely.

islands in the EU,

2.7.
All things considered, the EESC feels that the reasons
advanced do little to justify the provision, so much so that one
might wonder whether this were not a almost a case of state
aid rather than a temporary tax exemption. However, the
Committee is well aware of the political circumstances and of
the state of relations between Corsica and the motherland. A
refusal would have consequences reaching far beyond the
relatively small figures at stake. Consequently, and mindful of
its responsibilities, the EESC reluctantly endorses the proposed
directive as submitted.

Brussels, 16 July 2003.

The President

of the European Economic and Social Committee

Roger BRIESCH

Opinion of the European Economic and Social Committee on the ‘Proposal for a Decision of the
European Parliament and of the Council for a monitoring mechanism of Community greenhouse
gas emissions and the implementation of the Kyoto Protocol’

(COM(2003) 51 final — 2003/0029 (COD))

(2003/C 234/14)

On 19 February 2003 the Council decided to consult the European Economic and Social Committee,
under Article 175 (1) of the Treaty establishing the European Community, on the above-mentioned
proposal.

The Section for Agriculture, Rural Development and the Environment, which was responsible for
preparing the Committee’s work on the subject, adopted its opinion on 27 June 2003. The rapporteur
was Ms Le Nouail-Marlière.

At its 401st Plenary Session on 16 and 17 July 2003 (meeting of 16 July), the European Economic and
Social Committee adopted the following opinion by 106 votes in favour, with eight abstentions.

1.

Introduction

Scientific evidence (1) confirms that climate change is
1.1.
taking place and that most of the warming observed during
the last 50 years is attributable to human activities. The

atmosphere concentration of carbon dioxide has increased by
31 % in 25 years, the global average temperature has increased
by 0,6 °C since 1861 and the rate of change will be more rapid
if measures are not taken to reduce emissions. Temperatures
are projected to rise by 1,4 to 5,8 °C over the next 100 years,
and sea levels by between 0,1 — 0,9 metres (2).

( 1) Third Assessment Report of

the Intergovernmental Panel on
Climate Change (IPCC) 2001 and European Commission study on
World Energy, Technology and Climate Policy Outlook.

(2) Europe’s environment: the third assessment, European Environ-

ment Agency, Copenhagen, 2003, p. 91.