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2008-2009-2010
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
Excise Tariff Amendment (Tobacco) Bill 2010
Customs Tariff Amendment (Tobacco) Bill 2010
EXPLANATORY MEMORANDUM
(Circulated by the authority of the
Treasurer, the Hon Wayne Swan MP and the
Minister for Home Affairs, the Hon Brendan O'Connor MP)
Table of contents
General outline and financial impact 5
Chapter 1 Increased tax on tobacco products 7
General outline and financial impact
Increased tax on tobacco products
These two Bills amend the Excise Tariff Act 1921 and the Customs
Tariff Act 1995 to increase the excise and excise-equivalent
customs duty rate applying to tobacco, cigars, cigarettes and snuff
by 25 per cent, from $0.26220 to $0.32775 per stick not exceeding
in weight 0.8 grams per stick actual tobacco content, and from
$327.77 to $409.71 per kilogram for other tobacco.
Date of effect: 30 April 2010.
Proposal announced: On 29 April 2010, excise and customs notices
were published in the Commonwealth Government Special Notices
Gazette No. S63 and No. S62, respectively.
Financial impact: This measure will have these revenue
implications:
|Revenue ($m) |2009-10|2010-11|2011-12|2012-13|2013-14|
|Australian |205 |870 |900 |920 |960 |
|Taxation | | | | | |
|Office | | | | | |
|Australian |25 |260 |270 |280 |290 |
|Customs and | | | | | |
|Border | | | | | |
|Protection | | | | | |
|Service | | | | | |
|Impact on |230 |1,130 |1,170 |1,200 |1,250 |
|fiscal | | | | | |
|balance | | | | | |
These revenue impacts do not include the following estimated
increased goods and services tax collections:
|Revenue ($m) |2009-10|2010-11|2011-12|2012-13|2013-14|
|Goods and |25 |115 |115 |120 |130 |
|services tax | | | | | |
Compliance cost impact: Minor transitional compliance and
administration costs are expected from this rate change.
Chapter 1
Increased tax on tobacco products
Outline of chapter
1. This chapter explains amendments to the respective Schedules of the
Excise Tariff Act 1921 and the Customs Tariff Act 1995 to alter the
excise and excise-equivalent customs duties applying to tobacco
products.
Context of amendments
2. Excise is a tax on certain goods produced in Australia including
alcohol (other than wine), tobacco and fuel. Imported goods
comparable to those subject to excise, known as 'excise-equivalent
goods', attract customs duty that includes a component at the same
rate as the excise rate so that imports and locally-produced goods
are taxed in an equivalent fashion. This component is commonly
referred to as 'excise-equivalent customs duty'.
3. The Government increased the excise rate applying to 'tobacco,
cigars, cigarettes and snuff', and the relevant excise-equivalent
customs duty rates applying to the equivalent imported products by
25 per cent, applying on and from 30 April 2010. This equates to
an increase from $0.26220 to $0.32775 for sticks of tobacco (for
example, cigarettes or cigars) not exceeding 0.8 grams per stick
actual tobacco content in weight, and from $327.77 to $409.71 per
kilogram for other tobacco (for example, loose tobacco). The rates
of excise and excise-equivalent customs duty on 'tobacco, cigars,
cigarettes and snuff' are subject to indexation on a half-yearly
basis and are adjusted in February and August each year.
4. These amendments increase the rate for item 5 of the Schedule to
the Excise Tariff Act 1921 and the relevant rates in the Customs
Tariff Act 1995.
Summary of new law
5. This measure changes the Schedule to the Excise Tariff Act 1921 to
increase the rate in item 5.1 from $0.26220 to $0.32775 for sticks
of tobacco not exceeding 0.8 grams of actual tobacco content in
weight, and increase the rate in item 5.5 from $327.77 to $409.71
per kilogram for other tobacco. This measure also amends Schedule
3 to the Customs Tariff Act 1995 so that the rates in the Schedule
accord with changes to the Schedule to the Excise Tariff Act 1921.
It is noted that the rates for item 5 of the Schedule to the Excise
Tariff Act 1921 and the excise-equivalent subheadings of Schedule 3
to the Customs Tariff Act 1995 are subject to indexation on a half
yearly basis and are adjusted in February and August each year.
Comparison of key features of new law and current law
|New law |Current law |
|Excise duty rate |
|Item 5.1 of the Schedule |Item 5.1 of the Schedule |
|to the Excise Tariff Act |to the Excise Tariff Act |
|1921 has a rate of |1921 has a rate of |
|$0.32775 per stick. |$0.26220 per stick. |
|Item 5.5 of the Schedule |Item 5.5 of the Schedule |
|to the Excise Tariff Act |to the Excise Tariff Act |
|1921 has a rate of |1921 has a rate of |
|$409.71 per kilogram of |$327.77 per kilogram of |
|tobacco content. |tobacco content. |
|Excise-equivalent customs duty rate |
|Subheadings 2402.10.20, |Subheadings 2402.10.20, |
|2402.20.20 and |2402.20.20 and |
|2403.10.30, in Schedule 3|2403.10.30, in Schedule 3|
|to the Customs Tariff Act|to the Customs Tariff Act|
|1995 have rates of |1995 have rates of |
|$0.32775 per stick. |$0.26220 per stick. |
|Subheadings 2401.10.00, |Subheadings 2401.10.00, |
|2401.20.00, 2401.30.00, |2401.20.00, 2401.30.00, |
|2402.10.80, 2402.20.80, |2402.10.80, 2402.20.80, |
|2403.10.70, 2403.91.00 |2403.10.70, 2403.91.00 |
|and 2403.99.80 in |and 2403.99.80 in |
|Schedule 3 to the Customs|Schedule 3 to the Customs|
|Tariff Act 1995 have |Tariff Act 1995 have |
|rates of $409.71 per |rates of $327.77 per |
|kilogram of tobacco |kilogram of tobacco |
|content. |content. |
Detailed explanation of new law
6. 'Tobacco, cigars, cigarettes and snuff' are classified in item 5 of
the Schedule to the Excise Tariff Act 1921. Tobacco is defined in
the Schedule to the Excise Tariff Act 1921 as 'tobacco leaf
subjected to any process other than curing the leaf as stripped
from the plant'.
7. Imported tobacco products and manufactured tobacco substitutes are
classified under several subheadings in Schedule 3 to the Customs
Tariff Act 1995. The subheadings that receive equivalent tax
treatment to item 5 of the Schedule to the Excise Tariff Act 1921
are: 2401.10.00, 2401.20.00, 2401.30.00, 2402.10.20, 2402.10.80,
2402.20.20, 2402.20.80, 2403.10.30, 2403.10.70, 2403.91.00 and
2403.99.80.
8. Additionally, Schedules 5, 6, 7 and 8 to the Customs Tariff
Act 1995 specify rates of duty for certain goods, including tobacco
products, imported under the Australia-US Free Trade Agreement, the
Thai-Australia Free Trade Agreement, the Australia-Chile Free Trade
Agreement and the ASEAN-Australia-New Zealand Free Trade Agreement,
respectively. The Bill amends the relevant items in these
Schedules so that the increased rates of duty apply to the above
tobacco products when imported under these Free Trade Agreements.
9. These Bills seek to legislate the increased rates of tobacco excise
and excise-equivalent customs duty.
10. The amendments set out in the Excise Tariff Amendment (Tobacco)
Bill 2010 alters the Schedule to the Excise Tariff Act 1921 to
increase the rate applicable under item 5.1 from $0.26220 per stick
to $0.32775 per stick, and the rate applicable under item 5.5 from
$327.77 to $409.71 per kilogram for other tobacco. [Schedule 1,
items 1 to 2 of the Excise Tariff Amendment (Tobacco) Bill 2010]
11. Additionally, Schedule 3 to the Customs Tariff Act 1995 is altered
by the Customs Tariff Amendment (Tobacco) Bill 2010 so that the
relevant rates of excise-equivalent customs duty accord with
changes to the Schedule to the Excise Tariff Act 1921. [Schedule
1, items 1 to 11 of the Customs Tariff Amendment (Tobacco)
Bill 2010]
12. The Bill also amends rates of duty for the items in Schedules 5, 6,
7 and 8 of the Customs Tariff Act 1995 that correspond to the above
subheadings in Schedule 3. The amendments to the Customs Tariff
Act 1995 ensure that the excise equivalent component of customs
duty on imported 'tobacco, cigars, cigarettes and snuff' is the
same as the rates of excise duty applicable to those goods when
produced in Australia and will apply to goods when imported from
all countries. [Schedule 1, items 12 to 55 of the Customs Tariff
Amendment (Tobacco) Bill 2010]
Application and transitional provisions
13. In accordance with subsection 5(2) of the Excise Tariff Act 1921,
these excise tariff amendments are taken to have commenced on
30 April 2010. [Section 2 of the Excise Tariff Amendment (Tobacco)
Bill 2010]
14. The amendments to the Customs Tariff Act 1995 are taken to have
commenced on 30 April 2010. In addition, the amendments apply to
goods entered for home consumption on or after 30 April 2010 and to
goods that have been imported into Australia before that date where
the time for working out the rate of import duty on the goods had
not occurred before that date. For example, this application
provision will apply to goods that were warehoused on importation
before 30 April 2010 and not entered into home consumption until on
or after that date. [Schedule 1, item 56 of the Customs Tariff
Amendment (Tobacco) Bill 2010]