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Customs Tariff Amendment Bill (No. 3) 2000
Date Introduced: 29 June 2000
House: House of Representatives
Portfolio: Justice and Customs
Commencement: The formal provisions commence on Royal Assent. The measures contained in the Bill have differing commencement dates which are described in the Main Provisions section.
To introduce measures contained in Customs Tariff Proposals into the Customs Tariff Act 1995. The measures repeal a number of 'nuisance' tariffs and increase tariffs related to goods that may be used in petrol substitution schemes.
As there is no central theme to the Bill the background to the various measures will be discussed below.
On 24 July 1998 the Minister for Industry, Science and Tourism announced the review of 2 141 tariff items which the Minister described as 'nuisance tariffs'. They were characterised as raising less than $100 000 per year for each item and offering little or no protective benefit to Australian industry.(1) An additional characteristic that has been attached to nuisance tariffs is that their rate is 5% or less.(2) The number of items under consideration was reduced to 1 058 by August 1998 and on 8 December 1999 Customs Tariff Proposal No. 7 1999 was tabled in the House of Representatives to, among other measures, remove the tariff from 268 nuisance items.(3)
Tariffs - General
According to a recent Draft report by the Productivity Commission(4) there are approximately 5 700 tariff headings of which 2 729 are free , 10 are below 5%, 2 173 are at 5% and 799, concentrated in the passenger motor vehicle (PMV) and textile, clothing and footwear (TCF) industries, are above 5%.(5) It should also be noted that these are general rates and that concessional rates can apply, principally for imports from developing countries. In relation to the goods under consideration by the Productivity Commission, which excluded goods imported free and the PMV and TCF sectors, the simple, average general tariff rate was found to be 2.2%, with the highest rates applying to fabricated metal products (3.8%), wood and wood products (3.3%), other manufacturing (3.1%) and non-metallic mineral products and basic metal products (2.9%)(6).
While the total revenue from tariffs has been increasing in recent years and is estimated to have been approximately $3 billion in 1998-99, its contribution to overall revenue has been steadily declining. In 1986-87 tariffs accounted for approximately 4% of total Commonwealth revenue and this has steadily fallen to under 2% (estimated) in 1999-2000.(7)
Australia has agreed with APEC's Bogor Declaration which calls for free and open trade and investment in the Asia Pacific by 2010 for industrialised economies and 2020 for developing economies and has given a commitment to review the general rate of tariffs. The Productivity Commission's Draft report referred to above forms part of that process.
There are differing estimates of any potential gains from the removal of general tariffs at the 5% rate. In it's Draft report the Productivity Commission notes estimates ranging from 0.01% to 1% of GDP per year and itself reached an estimate of a GDP increase from 0.04% to 0.08% of GDP per year over a nine year period following the removal of the general rate of tariff.(8) The Productivity Commission also estimated that the removal of general tariffs would cost approximately $1.2 billion per year (a report prepared by the director of the National Institute of Economic and Industry Research is reported to have estimated that the removal of the general tariff would cost the government $17 billion in lost revenue over 10 years).(9)
The Productivity Commission also noted a number of other issues such as adjustment costs, regional and industry effects, current administrative and compliance costs and possible adjustment assistance. It then examined a number of options including the abolition of the general rate from 1 July 2001 or July 2003, phased reductions and no reduction until 2005 before recommending that the 5% rate be abolished sooner rather than later and preferably from 1 July 2001. The Draft report states:
Overall, the Commission considers that there is a sufficient weight of positive factors to suggest that the tariffs under reference should be reduced to Free sooner rather than later.(10)
Schedule 1 of the Bill will remove 'nuisance' tariffs contained in, according to the explanatory memorandum, 268 tariff subheadings.
Application: From 15 December 1999 (the date announced in Customs Tariff Proposal No. 7 of 1999) (subclause 2(2)).
For background on the area of fuel substitution refer to the Digest for the Petroleum Excise Amendment (Measures to Address Evasion) Bill 2000 (No. 154 1999-2000).
Schedule 2 will insert the measures contained in Customs Tariff Proposal No. 1 (2000) into the Customs Tariff Act 1995. The measures place a customs tariff equivalent to the excise payable on Australian produced toluene and similar products.
Application: From 10 March 2000, the date announced in Customs Tariff Proposal No. 1 (2000) (subclause 2(2)).
- Minister for Industry, Science and Tourism, Media Release, 24 July 1998.
- For example, refer to the Explanatory Memorandum to the Bill, p. 2.
- House of Representatives, Hansard, 8 December 1999, p. 13029.
- Productivity Commission, Review of Australia's General Tariff Arrangements, 25 May 2000, http://www.pc.gov.au/inquiry/tariff/draftreport/index.html
- ibid., p. 8.
- ibid., p. 9.
- ibid., p. 11.
- ibid., pp. 32-5.
- The Age, 1 August 2000.
- ibid., p. 117.
15 August 2000
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