House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Treasurer the Hon John Dawkins, M.P.)

General Outline and Financial Impact

The following Bills will modify the application of the Sales Tax (Exemptions and Classifications) Act 1992 to effect a phasing in of increases in the rates of sales tax applicable to wine, cider and other similar beverage;

Sales Tax (Customs) (Wine - Deficit Reduction) Bill 1993

Sales Tax (Excise) (Wine - Deficit Reduction) Bill 1993

Sales Tax (General) (Wine - Deficit Reduction) Bill 1993

Summary of proposed amendment

Purpose of amendments: The abovementioned Bills will make the following changes:

Alcoholic wines

Increase the rate of sales tax on alcoholic wines ( more than 1.15% by volume of alcohol) from 20% to 31% for a designated period, at which time the rate is to be reduced to 22%. That period will start on 18 August 1993 and will end on 31 October 1993, or the day before any earlier date which may be announced in a statement laid before the House of Representatives. Phase in an increase in the rates from 22% to 26% in stages corresponding to the beginning of the financial years, over the period 1 November 1993, or an announced earlier date, to 1 July 1995.

Low alcohol wines

Increase the rate of sales tax on low alcohol wines (not more than 1.15% by volume of alcohol) from 10% to 21% for a designated period, at which time the rate is to be reduced to 12%. That period will start on 18 August 1993 and will end on 31 October 1993, or the day before any earlier date which may be announced in a statement laid before the House of Representatives. Phase in an increase in the rates from 12% to 16% in stages corresponding to the beginning of the financial years, over the period 1 November 1993, or an announced earlier date.

Date of effect: 18 August 1993

Proposal announced: 13 October 1993

Financial gain: