Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2002-2003
(Circulated
by authority of the
Minister for Justice and Customs,
Senator
the Honourable Christopher Martin Ellison)
CUSTOMS TARIFF AMENDMENT (ACIS) BILL 2003
The purpose of this Bill is to amend the Customs Tariff Act 1995
(the Tariff) to:
• Provide a reduction, from 1 January 2010, of
customs duty rates for passenger motor vehicles (PMV) and certain components,
from 10% to 5%; and
• Implement a related amendment to item 59
(used and secondhand PMV) in Schedule 4 of the Tariff.
The amendments
contained in this Bill complement amendments in the ACIS Administration
Amendment Bill 2003.
The ACIS Administration Act 1999, the ACIS (Unearned Credit
Liability) Act 1999 and the Customs Tariff Amendment (ACIS
Implementation) Act 1999 established the Automotive Competitiveness and
Investment Scheme (ACIS) to operate from 1 January 2001 to 31 December 2004. In
brief, the purpose of ACIS is to provide transitional assistance to encourage
competitive investment and innovation in the Australian automotive industry in
order to achieve sustainable growth, both in the Australian market and
internationally, in the context of trade liberalisation.
The ACIS
Administration Amendment Bill 2003 will extend the operation of ACIS beyond 2005
to 2015 with the combination of targeted assistance and the lowering of tariffs
being designed to provide incentives for growth in the automotive manufacturing
industry.
The Customs Tariff Amendment (ACIS Implementation) Act 1999
provided for a reduction of duty rates for PMV and certain components, from 15%
to 10%, from 1 January 2005.
The Customs Tariff Amendment (ACIS)
Bill 2003 provides for a further reduction of duty rates applicable to PMV and
certain components, to 5%, from 1 January 2010. This rate currently applies to
most manufactured machinery, equipment and components.
The enactment of
the post 2010 duty rates at this time will provide transparency and certainty
for automotive and component manufacturers, enabling sufficient time for
planning prior to the scheduled reduction in 2010.
FINANCIAL IMPACT
STATEMENT
The cost to the Government in revenue forgone as a
result of the proposed tariff reductions is estimated to be around $290 million
in 2009-2010. In 2010-2011 this is projected to be around $640 million and of a
broadly similar magnitude in subsequent years.
It should be noted that it
is difficult to predict the actual impact on revenue of the proposed tariff cuts
on motor vehicles and related components in 2010 and after. There are a number
of variables such as the rate of growth in the motor vehicle market, consumer
preferences, and exchange rate fluctuations, which influence the price and
amount of duty payable on imported vehicles, that can affect the estimate of
tariff revenue.
REGULATION IMPACT STATEMENT
(RIS)
FUTURE AUTOMOTIVE ASSISTANCE
ARRANGEMENTS
The purpose of this Regulation Impact Statement is to explore the merits
of ceasing, continuing or changing the current form of assistance to the
automotive sector.
The automotive sector enjoys a higher level of
assistance than the bulk of Australian industries. In order to facilitate a
transition from a high tariff environment, the Government developed the
Automotive Competitiveness and Investment Scheme (ACIS). The objective of ACIS
is set out in S3 of the ACIS Administration Act 1999 as:
...to
provide transitional assistance to encourage competitive investment and
innovation in the Australian automotive industry in order to achieve sustainable
growth, both in the Australian market and internationally, in the context of
trade liberalisation.
Briefly, ACIS provides about $2.8 billion in
assistance to the industry over five years from 2001-05. This is expected to
prepare the industry for the fall of automotive tariffs to 10% in 2005.
Assistance is provided for production and for investment (motor vehicle
producers) and for research and development and investment (supply
chain).
The long lead times in the automotive sector mean that investment
decisions are taken many years ahead. Recognising that uncertainty may
adversely impact future investment, the Government initiated early consideration
of future automotive assistance arrangements, including the rate of further
tariff falls needed to attain Australia's free trade commitments.
The
Government referred the matter of future automotive assistance arrangements to
the Productivity Commission. By a parallel process, the Government also
commissioned the Automotive Council, comprising key industry participants, to
report to it on industry issues and perspectives.
The Productivity
Commission Report provides a balanced consideration of the merit of several
forms of assistance. It provides the bulk of the assessment of the options put
forward in this Statement. Quotations set out in the Statement are from the
Productivity Commission Report unless otherwise noted.
On 21 December 2001, the Government announced an inquiry into future
automotive assistance arrangements. The Productivity Commission was to examine
the operation of current arrangements and to make findings about the appropriate
form of any future tariff and assistance arrangements. The inquiry formally
commenced on 21 March 2002, with the Commission being given six months
to provide its findings.
The PC conducted its inquiry through discussions
with parties, release of a Position Paper and holding of a workshop to develop
modelling. It then invited submissions and held public hearings, before
reporting to the Government on 30 August 2002.
Briefly, the Commission
found that
• a settled path of future automotive assistance policy
would reduce uncertainty;
• tariff reduction to 5% could be achieved by
several means, but it preferred a reduction of 5% in 2010 as a means of
achieving this;
• continuation of ACIS after 2005 would facilitate the
reduction in the tariff rate;
• several options existed for extension
and level of funding of ACIS, with its preference for continuation of the
uncapped element of ACIS to 2015 and continuation of the capped element at $2
billion for a further five years.
The issue to be examined is not whether or by how much automotive tariffs
should be reduced. Industry specific tariffs are distortionary and there would
be benefits in resource allocation and lower prices from a reduction in such
tariffs. However, the issue of tariff reform is not irrelevant to consideration
of the form and duration of assistance arrangements in the automotive sector, as
past assistance has been tied to or closely associated with reductions in the
tariff rate of vehicles and automotive components.
The Government's
decisions in 1997 and 1998 provided a tariff pause for five years, ending with a
5% drop in the tariff to 10% in 2005. To facilitate the adjustment, existing
assistance provided through the then Duty Free Allowance was continued and a new
scheme, the Automotive Competitiveness and Investment Scheme (ACIS), was
initiated. The form of ACIS was also influenced by the tariff rate, as
incentives for production of motor vehicles are tied to the level of tariff on
passenger motor vehicles.
ACIS is a transitional measure designed to take
the industry into a lower tariff environment. There is, however, a need for the
industry to make a further transition from a tariff rate of 10% to 5%. The
issue is whether and how a further assistance package should be provided to
facilitate this transition to a tariff level equal to that prevailing for
industry generally.
While the Automotive Council recommended a
continuation of tariffs at 10 percent and the extension of ACIS to at least
2010, the Productivity Commission favours a drop in the tariff to 5% in 2010,
with the industry given a decade of policy certainty to 2015, at the end of
which industry specific assistance would cease.
The industry has
emphasised the need for the post 2005 assistance regime to establish a clear
policy path for at least five years and preferably for 10 years. Given the long
planning and investment horizons in the industry, the Commission considers this
to be a reasonable expectation. The range of broader pressures and
uncertainties facing the industry - particularly in relation to technological
change and future environmental policies - are already very considerable.
Providing a clear and extended path for assistance policy would serve to reduce
one source of uncertainty. Without clear policy directions, desirable
investment that would help to secure the industry’s future could be put at
risk. (Productivity Commission Report, pXXVII)
This Statement assumes
that the Government is disposed towards a further reform of tariff levels and
that it is disposed towards reducing the level of assistance provided to the
automotive sector. The issue then is to develop a mechanism to enable the
automotive sector to transition to a low tariff environment free of ongoing
industry specific subsidies.
The objective of the proposed regulation is to provide an apparatus for
delivering a final round of transitional assistance to the automotive sector to
ensure its future sustainability.
Regulation is currently provided
through ACIS legislation and is administered by the AusIndustry arm of the
Department of Industry, Tourism and Resources.
The options considered in this Statement are:
• Ending ACIS at
its current expiry date of end 2005
• An unlegislated scheme more in
line with the predecessors to ACIS
• A reformed ACIS with differing
elements or emphases
• A broad continuation of ACIS into the
future
a. End ACIS at end 2005
This option could be
considered to be in line with the stated transitional nature of the original
ACIS legislation. It is the extent of the Government’s current
commitments made in 1997 and 1998. In support of this option, one could point
to the considerable assistance industry received through tariff protection, the
former Export Facilitation Scheme and the former Duty Free Allowance. Against
this is the Productivity Commission’s observation that too sudden closure
of ACIS accompanied by tariff reduction may have the effect of eliminating firms
that might be viable if the removal of assistance was more gradual. Because
exposure to ACIS can be no more than 5% of the previous year’s sales, it
is considered that there would be no differential exposure by businesses under
ACIS. In effect this would serve to somewhat limit the impact of the Scheme
finishing in 2005.
b. An unlegislated scheme
The
predecessors to ACIS were not legislative; rather they were largely
administrative schemes (albeit operating within customs and tariff legislation).
The advantage of administrative schemes is flexibility in changing to meet
evolving circumstances. Against this is a lack of transparency, a probable lack
of precision in terminology and reduced certainty to participants. The fact of
the current legislated scheme is also a factor against reverting to an
unlegislated arrangement.
c. Reformed legislated scheme
It
would be possible to formulate a successor scheme utilising a different
methodology or architecture to achieve the scheme’s stated objectives.
One option raised with the Productivity Commission is to provide vehicle
producers with access to incentives for research and development, in lieu of
current incentives for production of motor vehicles. It would also be possible
to change the mix of incentives to the supply chain. An example could be to
seek that research and development assistance only go to higher level research,
rather than principally to engineering development, as at present. While this
may change the emphasis of incentives, the PC focuses on the primary purpose of
ACIS:
...given its transitional role, extension of ACIS to a range of new
activities could be counterproductive. In the Commission’s view, the role
of ACIS is not to introduce new firms or activities to additional industry
assistance, but rather to facilitate the transition to lower assistance for
currently assisted firms. (Productivity Commission Report,
p175)
The PC was also not persuaded that giving incentives for differing
activities necessarily encouraged or discouraged other desired
activities:
In the Commission’s view...it does not follow that
vehicle producers’ own use R&D is deterred because it is an ineligible
activity. Given the fungibility of duty credits, it may not matter a great deal
whether the basis for earning credits is related to production, R&D or
investments in plant and equipment.” ... “...the primary rationale
for ACIS is to provide transitional support. It is not a long term plan to
underpin automotive R&D - although it does eventually reward
successful R&D by vehicle producers.” ... “Perhaps most
significantly, by compelling a redirection of resources towards new R&D,
such a change could distort the capacity of some firms to use ACIS funds in a
manner which best supported their transition to lower assistance. (Productivity
Commission Report, p177)
There would be substantial uncertainty and cost
to industry and government in a significant overhaul of ACIS. Data collection
regimes have been developed for ACIS and a substantial change may impose costs
without necessarily producing a major change in behaviour.
d. Broad
continuation
The current ACIS legislation expires at end 2005. An
option would be broadly to continue ACIS in its current form and to defer its
expiry to a later date or else to replicate its provisions in new legislation.
The advantage of this option is the familiarity of the form of ACIS to
participants and to regulators, a position likely to be strengthened by the fact
that ACIS has three more years to run. Against this is that the chance to start
with a fresh approach is foregone. Such a fresh approach might come to
different conclusions on form of assistance, levels of incentives, entry
thresholds and payment mechanisms.
A settled path for future automotive
assistance policy would serve to reduce one source of uncertainty impacting on
investment and production decisions in the industry. To this end, specification
of clearly defined assistance regime for the industry for the decade after 2005
is appropriate. (Productivity Commission Report, p180)
Within the
concept of a broad continuation, there is still some flexibility for considering
changes that might improve ACIS’s performance. For example, the PC saw
merit in creating separate sub-schemes within a future ACIS to ensure types of
participants received assistance roughly in line with what they currently
receive. Otherwise, the MVP entitlements under ACIS would decline from 2005 in
line with the tariff reduction that year, while the supply chain would suffer no
such decline. The major industry associations have suggested that ACIS and its
successor contain separate pools for MVPs and the supply chain in the ratio of
55:45. This broadly reflects current activity and prospective increases in MVP
activity through domestic sales and particularly exports.
Further, broad
continuation could encompass some adjustment to levels and types of incentives,
provided such adjustments did not impact on incentives provided to other types
of participant. For example, if separate pools for MVPs and supply chain were
created, it would then be possible to excise some funds from the MVP pool and
use these funds to produce a fund for MVPs to encourage introduction of
particular technologies or research that may enhance the competitiveness of the
industry.
The PC put forward three options for continuing ACIS. All
options included continuation of the uncapped element of ACIS to 2015. The
three options for the capped element of ACIS were:
• $2 billion over
the years 2006-10, so providing a seamless continuation of ACIS;
• $2
billion in net present value terms over the years 2006-15, so providing
certainty over a longer period;
• $2 billion in net present value terms
over the years 2006-15, but with funding in the first five year tranche set at a
level twice that of the second five year tranche.
While favouring the
first option, the PC stressed that the other options would fall for
consideration if there was significant concern about the ability of the industry
to adapt to a 5% reduction in the tariff at 2010. The PC did not specify
discount rates or start or end dates for calculating the net present value of $2
billion. The PC was clear that the duration of funding would be limited to
2006-2015 and not exceed $2 billion however calculated. This suggests there is
no correct amount of assistance, rather the level is the minimum thought
necessary to achieve the tariff reduction objective within a specified
timeframe.
a) The option of ending ACIS from 2005 would have the effect of removing
subsidies of approximately $560 million per year for the automotive sector. In
looking at this option, the PC considered that the adverse impact on the
industry would be too severe to be sustained without causing significant damage
to many individual participants. It did not recommend this course.
While
parts of the Australian automotive industry are performing strongly in global
markets, there are still significant changes required if the industry as a whole
is to become competitive without substantial government support. Some of these
will involve changes to the composition and structure of production, some will
require a rebalancing of output between domestic and export markets, and some
will require changes in the industry’s operating practices. (Productivity
Commission Report, pXXV)
... the assistance regime should provide the
industry with sufficient time to make the further changes necessary to secure
its longer-term future. Notwithstanding the already long period of support for
the industry, reducing remaining assistance too quickly after 2005 could put at
risk production that would have become internationally competitive in the longer
term under a more gradual transition process. Given the industry’s size
and linkages with the rest of the economy, the costs to the community from
‘over-shooting’ could be substantial. (Productivity Commission
Report, pXXVI).
Withdrawal of ACIS support when the current scheme
expires at the end of 2005 would carry downside risks. It is clear that many
parts of the industry are still some way from being truly internationally
competitive. Hence, an immediate withdrawal of ACIS, in combination with
further tariff reductions, could be sufficient to precipitate the exit of firms
from the industry that would have become internationally competitive under more
accommodating transitional arrangements. Consistent with the current assistance
package, the Commission sees a continuation of ACIS after 2005 as a means of
facilitating a reduction in the tariff to 5 per cent. (Productivity Commission
Report, pXXIX)
In the short term, the effect of this proposal would
likely be some exit from the industry by some participants, with consequently
higher welfare payments. In the longer term, however, the resultant effects of
this option on consumers, non-automotive firms and the broader community would
be minimal. However, firms exiting the industry could result in a contraction
in the industry and economic growth. This option would result in a substantial
cost and administration saving to Government. However, the exit of a
substantial number of firms from the industry in certain states could result in
calls for regional assistance.
The PC estimates that, in 2001, the
consumer tax equivalent of the tariff was around $1.9 billion, with around $1
billion appropriated by the Government in the form of tariff revenue (before
ACIS). Ending ACIS in 2005 would accordingly free up substantial funding which
could then be made available to the broader community (including tax
reductions).
b) The fact that ACIS will have been in legislation for five
years by 2006 suggests that the option of continuing with an assistance scheme,
but not having it legislated is not a serious option. In any event, the
definitions and the rules embodied in the current ACIS legislation would have to
be replicated in administrative schemes, for no net saving. Decisions made
whether through legislation or administratively would remain appealable to the
Administrative Appeals Tribunal. There seems little to commend this option.
The costs and benefits to consumers, non-automotive businesses and community
would be minimal.
c) A change in the fundamental architecture of ACIS
would involve costs and benefits, but not necessarily differing impacts. The
cost would be in developing and drafting new approaches to delivering assistance
to the industry. A cost to participants would be in developing an understanding
of new rules and procedures. There is already a healthy consultancy sector
servicing the industry in claiming ACIS credits. It is likely that changes to
the architecture of ACIS would continue to benefit this externality on the
scheme. The benefit would be in potentially encouraging more productive
investment or research and development, or in reducing assistance to less
productive activities.
The PC takes the view that, on balance, it would
not be desirable to introduce new uncertainties into ACIS. It said:
The
Commission remains of the view that foreshadowing changes to a scheme that has
been in operation for less than two years would introduce undesirable
uncertainty about firms' future entitlements. There is already widespread
concern about uncertainty arising from the modulation arrangements used to
adjust firms' entitlements. Moreover, some of the proposed changes would add to
the complexity of the scheme and could be difficult and expensive to
administer.
The Commission considers that considerable weight should be
placed on avoiding uncertainty associated with significant changes in scheme
design-particularly, changes which could have major distribution consequences.
Thus, apart from seeing merit in the creation of separate capped funding pools
for vehicle and component producers - which would reduce uncertainty - it does
not consider other changes to the desired ACIS would be beneficial.
(Productivity Commission Report, p178)
The impacts of this option on
consumers, non-automotive firms and the community would be minimal.
In looking at the allocation of the funding, the PC noted industry
submissions seeking the creation of separate pools splitting funding between
MVPs and the supply chain. The PC found that a 50:50 allocation of capped
assistance would be appropriate. This allocation was based on information
provided by the Department of Industry, Tourism and Resources regarding the
current demand for assistance under ACIS. However, as the PC acknowledged in
its position paper, there is no science to such an allocation. More recent
figures supplied by industry to the Department suggest that other allocations
are possible. Industry has now agreed to a 55:45 allocation which is only a
minor deviation from the PC’s preferred position.
The impacts on
non-automotive firms would be minimal, given that ACIS assistance is limited to
passenger motor vehicles (and utilities). However, similar to consumers, there
may be some benefits derived from reduced domestic car prices, but balanced by
higher imported vehicle prices.
For motor vehicle producers and firms in
the automotive supply chain, ACIS assistance would provide significant leverage
for the competitiveness of the industry and be a major factor in determining its
long-term sustainability.
The continuation of ACIS broadly in its current
form would enable the streamlining of Government regulatory processes and
requirements, given that administrative arrangements for ACIS are already
established and operational.
The proposed regulation would be designed
to be WTO compliant with an indirect bearing on export performance.
The
continuation of ACIS would not result in any clear losers. Costs to consumers,
non-automotive businesses and the community would be minimal given that the
overall cost of continuing ACIS broadly in its current form would be fairly
neutral. For firms in the automotive industry, there would be some ongoing
compliance costs in respect to the legislation. However, this would not impose
an unnecessary burden, especially given that they would be receiving substantial
assistance through the Scheme.
The Government would incur ongoing costs
for administering the Scheme but given that administrative mechanisms are
established and operational, costs would be unchanged from the existing Scheme.
The exact funding profile for a ‘preferred option’ is subject to
decision by Cabinet.
RIS SummaryObjective: to provide a means of delivering a final round of transitional assistance to the automotive sector to ensure its future sustainability |
||||
|---|---|---|---|---|
|
Alternative
|
Impact on |
Likely benefit/comment
|
||
|
|
Households |
Business
|
Government
|
|
|
End ACIS in 2005
|
Minimal effect. |
Possible firm closures in the automotive industry. Minimal effect on firms
in other industries given that ACIS only covers motor vehicles and
components.
|
Reduced costs, however, this could be neutralised by an increased burden on
the social security system following firm closures.
|
Too sudden closure of ACIS accompanied by tariff reduction may have the
effect of eliminating firms that might be viable if the removal of assistance
was more gradual.
|
|
An unlegislated scheme
|
Minimal effect. |
Reduced planning certainty for firms in the automotive industry. Minimal
effect on firms in other industries.
|
Administrative costs due to a lack of transparency and probable lack of
precision in terminology.
|
The fact of the current legislated scheme is a factor against reverting to
an unlegislated arrangement.
|
|
Reformed legislated scheme
|
Minimal effect. |
Could distort the capacity of some automotive firms to use ACIS funds in a
manner which best supported their transition to lower assistance. Modulation of
claims may neutralise the benefits of the change. Minimal effect on firms in
other industries.
|
More administrative costs than the existing ACIS with possible heavy
modulation of claims.
|
There may be substantial uncertainty and cost to industry and government in
a significant overhaul of ACIS. Data collection regimes are already in place
for ACIS and a substantial change may impose costs without necessarily producing
a major change in behaviour.
|
|
Broad continuation
|
Minimal effect. |
Increased planning certainty for firms in the automotive industry. Form of
the scheme would be familiar to firms.
|
Scheme would be familiar to administer. Administrative mechanisms are
already established and operational. Quantum and duration would be as
determined by Cabinet.
|
Fewer distortional effects to the industry than other options.
|
There has been no formal consultation on the proposed regulation, as a
decision on the regulation is Cabinet-in-confidence. However the PC process and
the work by the Automotive Council cover the same ground and in considerably
more depth than would be possible in a Regulation Impact Statement. Attachment
A to the PC’s Report sets out the names of the parties with which it
consulted and from whom it received submissions.
Options included in this analysis have included:
1. Ending ACIS
at its current expiry date of end 2005 - similar to the PC’s views,
this option is not recommended as it may eliminate firms that might be viable if
the removal of assistance was more gradual.
2. An unlegislated scheme
- this option is not recommended given the lack of transparency and precision in
terminology coupled with a reduced certainty to participants.
3. Reformed
legislated scheme - similar to the PC’s views, this option is not
recommended due to the potential to distort the capacity of some firms to use
ACIS assistance in a manner which best supported their transition to lower
assistance.
4. Broad continuation - similar to the PC’s views,
it is recommended that ACIS should be continued in its current form (whether by
extension of existing legislation or renewed legislation).
Given
assistance is to continue and it is desirable to tie as much as possible to the
tariff, it makes sense to continue the current scheme as per option
4.
There are not sufficiently strong grounds to warrant modifying the
design of ACIS with respect to its eligibility criteria or the basis for earning
duty credits (including any linking of payments to the achievement of particular
outcomes, such as environmental and industrial relations objectives).
(Productivity Commission Report, p.180)
It is recommended that the
structure provided by ACIS be continued for a quantum and duration set by the
Government, with substantially the same architecture as currently operating.
The quantum and duration should be the minimum that enables the industry to
achieve successfully the transition to a lower tariff environment.
Implementation of the recommended option will be through legislated
amendments to the existing ACIS framework or new legislation replicating the
provisions of ACIS. In addition to changing the expiry dates in ACIS to achieve
the duration the Government decides on, there will be decisions on transitional
issues mentioned above.
It is proposed that review of the operation of
the ACIS successor would occur in 2008 and again about two years before its
expiry. The Government would specify that from the time of expiry, there would
be no further assistance to this industry beyond that made available to
industries in general.
Compliance costs for business would be fairly
minimal given that the Scheme would be continuing in broadly the same form.
Firms would already have sufficient knowledge of the Scheme in order to meet
their regulatory obligations.
CUSTOMS TARIFF (ACIS) AMENDMENT BILL
(NO. 2) 2002
Clause 1 - Short Title
This clause provides for the
Act, when enacted, to be cited as the “Customs Tariff Amendment (ACIS)
Act 2003”.
Clause 2 - Commencement
This clause
specifies that this Act will commence on the day on which it receives the Royal
Assent.
Clause 3 - Schedule(s)
This clause is the formal
enabling provision for the Schedule to the Bill, providing that each Act
specified in the Schedule is amended in accordance with the applicable items of
that Schedule. The clause also provides that other items of the Schedules have
effect according to their own terms.
SUMMARY OF
AMENDMENTS
Schedule 1 of this Bill inserts post 2010 duty rates for PMV and certain
components.
The tariff headings and subheadings specified in Part 1 of Schedule 1 to
this Bill do not include those headings and subheadings that have a preferential
rate for goods of Canadian origin. These subheadings are amended in Part 2 of
Schedule 1.
Items 1 to 84 in Part 1 of Schedule 1 to this Bill reduce the
rate of duty on PMV components, classified to one of the tariff headings or
subheadings specified in those items, from 10% to 5%, from 1 January
2010.
These changes do not interfere with margins of tariff preference
and duty-free entry for countries that receive preferential rates of
duty.
The tariff subheadings specified in Part 2 of Schedule 1 to this Bill
include those subheadings that also have a preferential rate for goods of
Canadian origin.
Items 85 to 155 in Part 2 of Schedule 1 to this Bill,
except items 124 to 131, reduce the rate of duty on PMV components, classified
to one of the tariff subheadings specified in those items, from 10% to 5%, from
1 January 2010. Items 124 to 131 inclusive apply to new and complete PMV,
classified to one of the tariff subheadings specified in those items, and
provide the same duty reduction for these goods.
These changes do not
interfere with margins of tariff preference and duty-free entry for countries
that receive preferential rates of duty, except for Canada. All Canadian goods
classified to the above tariff subheadings will enter duty free from
1 January 2010, although for some goods the margin of tariff preference
will be reduced.
The tariff subheadings specified in items 156 to 163 of Part 3 of
Schedule 1 to this Bill apply to used or secondhand PMV. These tariff
subheadings, in addition to the ad valorem duty rate of 10% applicable to
new PMV, also include an additional duty of $12,000 per vehicle.
Items
156 to 163 in Part 3 of Schedule 1 to this Bill reduce the ad valorem rate of
duty on used or secondhand PMV classified to one of the tariff subheadings
specified in those items, from 10% to 5% from 1 January 2010. In each case, the
additional duty of $12,000 per vehicle is maintained.
These changes do
not interfere with margins of tariff preference and duty-free entry for
countries that receive preferential rates of duty, except for Canada. All
Canadian goods classified to the above tariff subheadings will not be subject to
any ad valorem rate of duty from 1 January 2010, although for some goods
the margin of tariff preference will be reduced. The additional duty of $12,000
per vehicle will continue to apply.
Item 164 inserts post-2010 ad valorem duty rates for item 59 in Schedule
4 to the Tariff.
Item 59 provides for the importation of used or
secondhand PMV, as prescribed by
by-law, without the payment of the
additional rate of $12,000 per vehicle. (Refer to comments in relation to items
156 to 163 above).
This amendment reduces the ad valorem rate of duty on
used or secondhand PMV, as prescribed by by-law, from 10% to 5%, from 1 January
2010.