France Cuts Fuel Tax In Reunion

by Ulrika Lomas, Tax-News.com, Brussels

01 March 2012

The French overseas ministry has recently confirmed that fuel prices will be reduced in the island of Réunion by 8 cents per litre from March 1 until the end of the year, following a tax agreement reached with the French department’s local authorities.

The fuel price reduction is to be financed by the regional and communal council’s decision to renounce the tax known as the “octroi de mer”, a tax specific to the French overseas departments (DOMs) of Guadeloupe, Martinique, Guyana and Réunion, and levied on the importation and supply of goods. The tax currently generates around EUR24m (USD32m).

The chamber of commerce has also pledged to renounce a tax on the importation of hydrocarbons.

Following a recent meeting, Réunion prefect Michel Lalande announced that in addition to the fuel price reduction, electricity prices for low income earners will also be lowered, and the price of 40 essential commodities will be at least frozen from March 1, thanks to “the efforts of the local authorities”.

Located in the Indian Ocean, the French department Réunion has recently been in the grip of three nights of violence in the wake of a social movement to oppose fuel prices.

French President Nicolas Sarkozy, who aims to visit Réunion in April, has announced his own plans to put forward additional proposals shortly designed to aid the economic development of the island.

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