The dielectric response of a simple model of a polar fluid near neutral interfaces is examined by a combination of linear response theory and extensive molecular dynamics simulations. Fluctuation expressions for a local permittivity tensor epsilon(r) are derived for planar and spherical geometries, based on the assumption of a purely local relationship between polarization and electric field. While the longitudinal component of epsilon exhibits strong oscillations on the molecular scale near interfaces, the transverse component becomes ill defined and unphysical, indicating nonlocality in the dielectric response. Both components go over to the correct bulk permittivity beyond a few molecular diameters. Upon approaching interfaces from the bulk, the permittivity tends to increase, rather than decrease as commonly assumed, and this behavior is confirmed for a simple model of water near a hydrophobic surface. An unexpected finding of the present analysis is the formation of "electrostatic double layers" signaled by a dramatic overscreening of an externally applied field inside the polar fluid close to an interface. The local electric field is of opposite sign to the external field and of significantly larger amplitude within the first layer of polar molecules.