Overseas: the Court of Auditors proposes a reform of dock dues, tax “out of breath”

Europe 1 with AFP // Photo credits: Magali Cohen / Hans Lucas / Hans Lucas via AFP 12:40 p.m., March 5, 2024

The dock dues, a tax on imported products specific to overseas departments and regions (Drom), is a tax "out of breath" which must be "in-depth reformed", judges the Court of Auditors in a report released Tuesday.

Initially designed to protect local production, dock dues have become an essential support for the finances of overseas communities, but this tax is also often considered responsible for the high cost of living.

“The time seems to have come to fundamentally reform a tax system that is now exhausted in many respects and which no longer responds to the structural challenges facing overseas territories,” affirms the Court.

Pursuing "too many objectives simultaneously", according to its report, dock dues "therefore experience serious problems of consistency and efficiency" and suffer from "excessive complexity in relation to the revenue collected".

The financial institution thus believes that the system locks overseas economies "in a model that has little promise for the future", evoking a "long-term protectionism, limiting competition, innovation, and preserving acquired situations".

The first president of the Court of Auditors, Pierre Moscovici, spoke to the press in particular about "the proven negative impacts" of dock dues on the cost of living in overseas territories, "of the order of 5% at 10% of average additional costs.

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"Reformist"

“If it is not the only, or even the main cause of the cost of living in the Drom, sea dues contribute significantly” to the cost of living, he continued.

Pierre Moscovici also regretted that no exemption had been granted to public services, which have paid 159 million since 2017 in this respect, weighing in particular on hospital budgets.

The Court envisages three possible scenarios for the future of the tax, including a status quo which "appears to have to be discarded" and a "disruptive scenario" with its abolition by 2027 and its replacement by an alternative resource, for example regional VAT.

The preferred scenario, called "reformist", must systemically modify the dock dues, estimates the Court which issues twelve recommendations.

Among these, measures to strengthen control of the system or reducing the number of rates (from 7 to 16 currently depending on the Drom).

The Court also wants communities to devote more of this resource to investment, with dock dues currently used mainly to finance their operating expenses.

Finally, to mitigate the effects of the tax on prices, the magistrates of rue Cambon recommend capping it for essential products and excluding from the system products for which there is a local monopoly or for which local production is very weak.

“The expiration of the regime currently in force at the end of 2027 leaves the necessary time for peaceful and concerted development,” concludes the Court.

It remains to convince territories where “most elected officials are very attached” to this tax, concedes the Court.

In 2022, according to its calculations, the dock dues generated 1.64 billion euros in revenue for the five DROMs (Guadeloupe, Guyana, Martinique, Mayotte, Reunion) which receive it, notably providing 32% of the resources of communities.

In July 2023, an Interministerial Committee for Overseas Territories (CIOM) had already noted the need for “in-depth” reform of dock dues.