Explanatory Memorandum(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)
General outline and financial impact
This Bill amends the Excise Act 1901 to strengthen the provisions that regulate the production, dealing, manufacturing and storage of tobacco, in particular, and excisable goods generally. The measures are designed to provide a statutory framework within which the Australian Taxation Office can combat the illicit trade in tobacco which threatens to erode the excise revenue base. The main features of the amendments are:
- a comprehensive licensing scheme for the production of, and dealing in, tobacco and for the manufacturing and storage of excisable goods generally, including petroleum products and alcohol;
- controls, through permission requirements and offences for contravening those requirements, over the movement and possession of tobacco seeds, plant and leaf;
- increased penalties, including terms of imprisonment, for unlawful movement or possession of excisable goods on which duty has not been paid;
- an infringement notice penalty for selling or possessing excisable goods on which duty has not been paid; and
- extended powers for officers to stop and search conveyances for tobacco leaf or excisable goods.
Date of effect: The measures will commence from the date of Royal Assent.
Proposal announced: Not previously announced.
Financial impact: The measures form part of a strategy to combat the illicit trade in tobacco. The extent of the erosion of excise revenue attributable to the illicit trade is difficult to estimate.
Compliance cost impact: Compliance costs will increase marginally for producers of, and dealers in, tobacco leaf who will be required to apply identification labels to bales of tobacco leaf that are moved from their premises.
Impact: As the measures in this Bill are directed against illegal and non-compliant activity the regulatory impact of the amendments is minimal. The 2 elements of the proposals that could have some impact are changes to the licensing arrangements and the requirement for an approved form of labels to be attached to bales of tobacco leaf.
- The revised licensing scheme requires more information to be provided by applicants and licence holders than under existing arrangements, but is designed to discourage persons with a high risk of non-compliance and will not result in additional costs to persons who are likely to comply with the law.
- The proposal to require tobacco bale labels to be attached to tobacco bales when moved from the premises of a producer or dealer will impose some additional costs, but these are not expected to be significant and will assist in identifying the unauthorised movement of tobacco.
- Participants in the tobacco industry, and representatives of entities engaged in the manufacture and storage of excisable goods, have been consulted on the proposals and have indicated support for them.