Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)General Outline and Financial Impact
Reforming the taxation of alcoholic beverages
This Bill amends the Excise Act 1901 (Excise Act) to provide support for the administration and collection of excise duty on alcoholic beverages which will become excisable as a result of the Government's initiatives in reforming the taxation of alcoholic beverages.
Amendments to the Excise Tariff Act 1921 (Tariff Act) will provide the main mechanism to reform the taxation of alcoholic beverages. These amendments will be made by a Tariff Proposal which will be tabled in the Parliament before the end of the current financial year. Excise will be imposed on alcoholic beverages not previously subject to excise and adjust the rates of duty to make up for the removal of wholesale sales tax. The Tariff Act amendments will take effect on 1 July 2000 and complement the administrative provisions contained in the Excise Act.
The main purpose of this Bill is to:
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- amend definitions in the Excise Act to give effect to the Government's initiative to introduce excise on certain alcoholic beverages with less than 10% alcohol content;
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- provide additional circumstances and conditions for excisable and customable goods to be used in manufacture of excisable goods;
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- extend the conditions on the entry of home consumption of spirits to other excisable beverages (as defined);
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- give the Chief Executive Officer of Customs (CEO) the authority to permit certain alcoholic beverages to be entered into home consumption in bulk containers having a capacity of more than 20 litres; and
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- to include a decision of the CEO made in respect to bulk containers of certain alcoholic beverages as a decision that may be reviewed by the Administrative Appeals Tribunal.
Date of effect: The amendments will take effect from 1 July 2000.
Proposal announced: The Government announced the proposal in Tax Reform: not a new tax, a new tax system on 13 August 1998.
Financial impact: Measures specified in this Bill are of a minor and administrative nature only and have no financial impact. A financial impact statement detailing revenue forecasts will be included in a Bill to be introduced later in the year to amend the Tariff Act.
Compliance cost impact: The change in the type of products subject to alcohol excise and excise rates will affect approximately 20 new clients and 50 existing clients. New clients will be required to be licensed and pay excise on all applicable products. Existing manufacturers will be under a duty to pay excise on all drinks subject to the proposal.
The initial compliance costs would primarily result from manufacturers of designer drinks that are not currently subject to excise having to be licensed and calculate excise applicable. There will be some record keeping obligations for these manufacturers, however it is envisaged these manufacturers would already maintain computer accounting systems. Existing taxpayers' costs would stem from understanding the new legislation and adjusting their computer programs to ensure drinks not previously subject to excise are now included in their excise calculations.
Due to the number of manufacturers that would be subject to the new regime, the initial cost of compliance of the measure is estimated to be less than $1 million.
As changes are not recurrent, the recurring compliance costs for manufacturers are estimated as being negligible.