Explanatory Memorandum(Circulated by the Authority of the Minister for Justice and Customs, Senator the Honourable Amanda Vanstone)
Notes on clauses
A Bill for an Act to amend the Customs Tariff Act 1995 , and for related purposes.
- Clause 1
- Short Title - Customs Tariff Amendment Act (No. 1) 2000.
- Clause 2
- Subclause 1
- Clauses 1, 2 and 3 commence on the day on which this Act receives the Royal Assent.
- Subclause 2
- Schedule 1 is taken to have commenced on 1 November 1999.
- Subclause 3
- Schedule 2 is taken to have commenced on 15 November 1999.
- Clause 3
This clause is the formal enabling provision for the Schedules to the Bill, providing that each Act specified in the Schedules is amended in accordance with the applicable items of the Schedules. The clause also provides that the other items of the Schedules have effect according to their own terms.
The amendments in this Schedule are taken to have effect from 1 November 1999.
These amendments were tabled in the House of Representatives on 21 October 1999 as Customs Tariff Proposal No. 6 (1999).
Previous tobacco tariff arrangements encouraged the manufacture of low value, low weight cigarettes in large packets. This taxation advantage skewed consumption towards higher volume, lightweight cigarettes, which experts consider more harmful on health grounds.
The new structure replaces the previous complex arrangements which were introduced following the High Court decision on 5 August 1997 which invalidated state business franchise fees.
These amendments introduce a per stick rate of duty of $0.18872 (pre February 2000 Consumer Price Index adjustment) for cigarettes, cigars, bidis and other tobacco marketed in stick form containing not more than 0.8 grams per stick tobacco content. All other tobacco products pay duty at a rate of $235.90 per kilogram (pre February 2000 Consumer Price Index adjustment) of tobacco content. Products subject to this weight based rate include roll your own and pipe tobacco, heavy cigarettes, cigars and other stick form tobacco products containing more than 0.8 grams per stick tobacco content.
Item 67 in Schedule 4 of the Tariff Act has been created to allow tobacco classified to subheadings 2401.20.00, 2401.30.00 and 2403.91.00 to be entered duty free by licensed excise manufacturers when it is to be used for the further manufacturer of tobacco products.
Item No. 1 in this Schedule contains changes to the table of paired customs tariff subheadings and excise items in section 19(1) of the Custom Tariff Act. It allows the customs rate of duty to be adjusted in line with movements in the excise rate of duty for similar goods. This amendment contains consequential changes to the tobacco subheadings and items.
The amendments in this Schedule are taken to have effect from 15 November 1999.
These amendments were notified in Special Commonwealth Gazette S541 which was published on 11 November 1999 and was tabled in the House of Representatives on 25 November 1999 as Customs Tariff Proposal No. 8 (1999).
Petroleum duty evasion activities known as fuel substitution occur when petrol or diesel used as a transport fuel is replaced with product that attracts a lower rate of excise or customs duty. These activities also lead to unfair competition in the market place.
In January 1998, the Government introduced a system that required duty-free petroleum products to carry a chemical marker. The marker system also makes it illegal to sell these products in circumstances that attract the highest rate of duty.
These arrangements were initially quite effective. However, petroleum duty evasion activities again increased during 1999 as some parties exploited weaknesses in the tariff that allow certain fuel substitution activities to occur.
These amendments introduce a new tariff structure that removes the categories of fuel which were being extensively abused, most notably, those categories relating to duty free gasoline and diesel. Alternative arrangements are in place to protect those consumers with a legitimate need to access duty free product, in particular when diesel is used other than as a fuel.
These amendments will not create a new duty liability.
Item No. 1 of this Schedule contains consequential changes to the paired customs tariff subheadings and excise items in section 19(1) of the Tariff Act. The changes are only to petroleum products references.