Bills Digest No. 99   1997-98 States Grants (General Purposes) Amendment Bill (No. 2) 1997


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WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

CONTENTS

Passage History

States Grants (General Purposes) Amendment Bill (No. 2) 1997

Date Introduced: 23 October 1997
House: House of Representatives
Portfolio: Treasury
Commencement: Royal Assent

Purpose

To alter the shares for tobacco revenue related payments to the States and Territories and provide for future changes in the distribution of alcohol, tobacco and petroleum revenues to be prescribed by regulation.

Background

The amendments proposed by the Bill give effect to announcement of the Government of 11 September 1997 to distribute revenue raised from the surcharge on tobacco to the States and Territories according to new distribution shares.(1)

The amendments proposed by the Bill are a consequence of the High Court's decision of 5 August 1997 in Ha and Another v State of New South Wales & Others and Walter Hammond & Associates v State of New South Wales & Ors relating to business franchise fees. Following the High Court's decision the Government introduced measures to protect State and Territory tobacco, petroleum and alcohol revenue.

The background to the measures is treated in detail in two recent IRS publications:

'What is an excise duty? Ha and Hammond v NSW', Research Note, Number 1, August 1997; and

'Federalism Up in Smoke? The High Court Decision on State Tobacco Tax', Current Issues Brief, No. 1, 1997-98.

The reader is also referred to the Bills Digests for the package of nine Bills introduced on the 28 August dealing with the consequences of the High Court's decision.(2)

The amendments proposed by the Bill are the product of discussions with State and Territory Governments and the tobacco industry aimed at resolving industry concerns regarding the replacement of the value-based business franchise fees system of the States and Territories with a Commonwealth weight-based system of fees.

The outcome of the discussions was a revised set of tobacco and tobacco products taxation arrangements whereby the Commonwealth was asked by the States and Territories to remove the current $167 per kilogram customs and excise duty surcharge on tobacco and tobacco products and replace it with:

  • a 'hybrid option', involving an ad valorem surcharge of 50.32 per cent of the final wholesale list price (which includes both the total weight-based duty and the ad valorem component), along with a weight-based duty surcharge of $2.65 per kilogram; or
  • a solely weight-based duty surcharge of $147.90 per kilogram, where there are no more than 1200 cigarettes per kilogram; or
  • a solely weight-based duty surcharge of $265.73 per kilogram, where there are more than 1200 cigarettes per kilogram.(3)

It is stated in the Explanatory Memorandum to the Customs Tariff Amendment Bill (No. 5) 1997 that:

The new method of calculating the customs duty on these products was implemented immediately by the publication of a notice in the Commonwealth Gazette in accordance with section 273EA of the Customs Act 1901. The notice was published on 16 September 1997 and took effect on and from 17 September 1997.(4)

The amendments giving effect to the gazetted changes are contained in the Customs Tariff Amendment Bill (No. 5) 1997 and Excise Tariff Bill (No. 5) 1997.

The States and Territories also requested that the revenue raised from the surcharge on tobacco and tobacco pdroucts be distributed according to new distribution shares. The Bill gives effect to that request.

Main Provisions

The amendments proposed by item 1-3 of Schedule 1 of the Bill alter the shares for tobacco revenue related payments to the States and Territories (item 2) and provide for future changes in the distribution of alcohol, tobacco and petroleum revenues to be prescribed by regulation (items 1-3).

Endnotes

  1. Assistant Treasurer, Press Release, 11 September 1997.
  2. See Bills Digest Nos 23-31 1997-98.
  3. Assistant Treasurer, Press Release, 11 September 1997.
  4. Customs Tariff Amendment Bill (No. 5) 1997, Explanatory Memorandum.

Contact Officer and Copyright Details

Ian Ireland
11 November 1997
Bills Digest Service
Information and Research Services

This paper has been prepared for general distribution to Senators and Members of the Australian Parliament. While great care is taken to ensure that the paper is accurate and balanced, the paper is written using information publicly available at the time of production. The views expressed are those of the author and should not be attributed to the Information and Research Services (IRS). Advice on legislation or legal policy issues contained in this paper is provided for use in parliamentary debate and for related parliamentary purposes. This paper is not professional legal opinion. Readers are reminded that the paper is not an official parliamentary or Australian government document.

IRS staff are available to discuss the paper's contents with Senators and Members
and their staff but not with members of the public.

ISSN 1328-8091
© Commonwealth of Australia 1997

Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, without the prior written consent of the Parliamentary Library, other than by Members of the Australian Parliament in the course of their official duties.

Published by the Department of the Parliamentary Library, 1997.

This page was prepared by the Parliamentary Library, Commonwealth of Australia
Last updated: 12 November 1997

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