TAXATION: GREEN LIGHT FOR EXTENSION OF REDUCED EXCISE-DUTY REGIME FOR TOBACCO IN CORSICA.

Directive 92/790/EEC provides for Member States setting a minimum overall excise duty of 57% of the retail price, all taxes included. This level of taxation cannot be less than Euro 60 for 1,000 cigarettes in the price category most in demand. From July 1, 2006, the sum of Euro 60 will be replaced by Euro 64.

On the adoption of this Directive, France was authorised to maintain a exemption regime in Corsica applying an excise duty rate lower than national excise duties. This specific regime expired on December 31, 1997. However, Directive 1999/81/EEC extended the derogation until December 31, 2002.

The specific regime applied in Corsica permits the retail selling of cigarettes at a price equal to two-thirds of the retail price on the French mainland. At the end of 2002, the most popular category of cigarettes cost Euro 120 in Corsica and Euro 180 in France. The level of excise duties was respectively Euro 38.65 and 106.18. The impact of excise duties on the retail price amounts to 32.21% in Corsica and 58.99% in mainland France, compared with a minimum Community rate...