House of Representatives

Excise Amendment (Compliance Improvement) Bill 2000

Second Reading Speech

Mr SLIPPER (Fisher - Parliamentary Secretary to the Minister for Finance and Administration)

I move:

That the bill be now read a second time.

The amendments proposed by the Excise Amendment (Compliance Improvement) Bill 2000 provide a clear message to participants in the illicit market in tobacco that the government is taking prompt and resolute measures to protect the excise revenue.

The package of measures in this bill will strengthen the statutory framework within which the Australian Taxation Office can combat the illicit tobacco trade. These measures cover the range of illegal activity that threatens to undermine the revenue base for tobacco excisefrom the growing of plants destined for the illicit market, to the retailing of under-the-counter chop chop.

As an indication of the seriousness with which the government seeks to counter the illicit tobacco trade, the maximum penalties for relevant existing offences will be increased tenfold.

A number of new offences, specific to the unauthorised movement, dealing and possession of tobacco leaf, will be introduced. In addition to fines, they will provide for maximum terms of imprisonment of two years. The maximum pecuniary penalties will be set at 500 penalty units currently $55,000 or five times the duty that would be payable if the tobacco leaf had been manufactured into tobacco and had been entered into home consumption.

Tobacco seeds, tobacco plants or tobacco leaf that is found outside the regulated sector will be seized, forfeited to the Commonwealth and destroyed.

These amendments will introduce a comprehensive licensing scheme for persons engaged in the tobacco industry. Only a licensed producer will be permitted to grow tobacco. Dealers in tobacco seeds, tobacco plants or tobacco leaf will also be required to be licensed. Manufacturers of tobacco, and of other excisable goods, will continue to be required to be licensed, and the new licensing scheme will also apply to the proprietors of premises where excisable goods on which duty has not been paid will be stored.

Rigorous criteria will be applied to applicants for licences, and a failure to comply with licence conditions may result in the suspension or cancellation of licences.

Transitional measures will provide for existing licences and registrations to be treated as licences under the new scheme.

Following discussions with tobacco producer cooperatives, it is proposed that a system of monitoring the movement of bales of tobacco leaf be introduced. This will involve identifying labels being attached to tobacco leaf bales as a means of authorising the movement of tobacco leaf from the premises of producers and dealers. This will impose some relatively minor additional record-keeping costs, but will greatly assist in the identification of the movement of tobacco leaf to the illicit market.

The existing power of excise officers to stop and search conveyances will be extended. Trucks and other means of transport will be able to be stopped and searched for tobacco leaf or excisable goods if the officer has a reasonable suspicion of an offence being committed.

To deter distributors of illicit tobacco, an infringement notice scheme will be introduced for the less serious offences. Persons who, without authority, sell or possess excisable goods on which duty has not been paid will face an infringement penalty of 20 penalty units, currently $2,200. This will provide an efficient means of addressing the retailing of illicit tobacco. Persons who, instead, are prosecuted in court for this offence will, on a strict liability basis, face a fine of up to 100 penalty units or $11,000. For the more serious offences, the prosecutor could seek a fine of up to 500 penalty units, a term of imprisonment of up to two years or, if the court thinks fit, a combination of both.

Taken together the amendments proposed by this bill will improve the capability of the Australian Taxation Office to more effectively target its compliance enforcement activities against the illicit tobacco trade. They will also provide the means to counter arrangements that seek to defer liability to excise duty, or present a risk of duty evasion. Overall, they will help to protect the excise base which constitutes a significant proportion of Australia's taxation revenue. Full details of the measures in this bill are contained in the explanatory memorandum.

I commend the bill to the House and present the explanatory memorandum.

Debate (on motion by Mr Horne ) adjourned.