Bills Digest no. 180 2008–09
Excise Tariff Amendment (2009 Measures No. 1) Bill 2009
[No. 2]
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
Purpose
Background
Financial implications
Main provisions
Contact officer & copyright details
It should be noted that the name of the Bill as
introduced on 22 July 2009 is Excise Tariff Amendment (2009
Measures No. 1) Bill 2009.
The Bills is not identical to the earlier bill of the
same name, introduced in the House of Representatives on 11
February 2009, but is identical to the bill (which included
amendments made by the Government in the House of Representatives
on 25 February 2009) which was rejected by the Senate on 18 March
2009. The addition of the reference [No. 2] has been made by the
Department of the House of Representatives Table Office to indicate
that the Bill is introduced for a second time.
Passage history
Date
introduced: 22
June 2009
House:
House of Representatives
Portfolio:
Department of
Treasury
Commencement:
Sections 1–3 on the
day of Royal Assent; Schedule 1 on 27 April 2008 and Schedule 2 at
the same time as Schedule 2 to the Customs Tariff Amendment
(2009 Measures No. 1) Act 2009 commences.[1]
Links: The
relevant links to the Bill, Explanatory Memorandum and second
reading speech can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/.
When Bills have been passed they can be found at ComLaw, which is
at http://www.comlaw.gov.au/.
The purpose of the Bill is to
amend the Excise Tariff Act 1921 (the Excise Tariff Act)
to:
- increase the tax applying to ‘other excisable beverages
not exceeding ten per cent by volume of alcohol’ from $39.36
to $66.67 per litre of alcohol from 27 April 2008 and
- ensure that products which mimic spirit-based ready-to-drink
beverages (RTDs) are subject to the same tax rate as RTDs.
This Bills Digest should be read in conjunction with the
Bills Digest for the Customs Tariff Amendment (2009 Measures
No. 1) Bill 2009 [No. 2].[2]
The Customs Tariff Amendment (2009 Measures No. 1) Bill 2009
[No. 1] and Excise Tariff Amendment (2009 Measures No. 1) Bill 2009
[No. 1] (the original ‘alcopops’ bills) were introduced
into the House of Representatives and read for the first and second
times on 11 February 2009.[3] The relevant Bills
Digest contains information about the contents of the
bills.[4]
The original ‘alcopops’ bills contained changes to
the excise tariff and excise-equivalent customs tariff payable on
ready-to-drink beverages (colloquially referred to as
‘alcopops’). The ‘alcopops’ tax
changes were initially contained in two proposals which were tabled
in the House of Representatives by the Minister for Health and
Ageing Nicola Roxon on 13 May 2008 who stated that:
The excise and customs tariff proposals that I
have just tabled contain alterations to the Excise Tariff Act
1921 and Customs Tariff Act 1995.
The proposals formally place before the
parliament changes to both acts to increase the rate of excise and
customs duty applying to ‘other excisable beverages not
exceeding 10 per cent by volume of alcohol’ from $39.36 to
$66.67 per litre of alcohol content, on and from 27 April
2008.[5]
The two proposals were Excise Tariff
Proposal (No. 1) 2008 (covering goods made in
Australia)[6] and
Customs
Tariff Proposal (No. 1) 2008 (covering imported goods).[7]
During the debate on the original ‘alcopops’ bills
in the House of Representatives the existence of beer-based
alternatives to ‘alcopops’ (referred to as
‘malternatives’) was recognised. The
‘malternatives’ which are:
pitched at drinkers aged between 18 years and
30 years, are similar in alcohol content, flavour and appearance to
many alcopops. However, because these drinks are beer- rather
spirits-based, they attract far less excise than do their
‘alcopop’ equivalents, and retail for around half their
price.[8]
As a result, Nicola Roxon introduced amendments to the original
‘alcopops’ bills which would address this apparent loop
hole.[9] These
amendments were included in the bills (the amended
‘alcopops’ bills) which were transmitted to the Senate
for consideration on 11 March 2009.
In the lead up to the
vote on the amended ‘alcopops’ bills there was
considerable negotiation between the government and the minor
parties in an effort to assist the passage of the bills through the
Senate. In particular the Minister for Health and Ageing was
able to:
… woo Independent Senator Nick Xenophon
and the Greens with a package of measures that included an extra
$50 million for initiatives to tackle binge drinking….
- The Government has offered as concessions:
- A fund to provide sponsorship to local
community organisations
- Community-level initiatives to tackle binge
drinking
- improved telephone counselling services,
and
- possible expansion of social marketing
campaigns.[10]
However, despite these concessions, the Senate voted down the
amended ‘alcopops’ bills on 18 March 2009.[11]
The Government subsequently moved that there be two new tariff
proposals, namely
Excise Tariff Proposal (No. 1) 2009 (covering goods made in
Australia) and
Customs Tariff Proposal (No. 3) 2009 (covering imported
goods).[12]
A tariff proposal is not legislation. It is an executive
instrument. A proposal does not legally alter the relevant
legislative tariff[13] and there is case law which could be used to support
the suggestion that a proposal alone does not actually give the
Commonwealth legal authority to collect duties according to the new
or amended tariff contained in the proposal.[14]
In the period leading up to the crucial vote on the amended
‘alcopops’ bills on 18 March 2009 there was
considerable debate about whether in the event the bills were not
passed, the amount of the tax already collected, (being
approximately $290 million),[15] would need to be refunded and if so, to whom it
would be refunded.[16]
The Government took the view that the monies collected would
have to be returned to the distillers.[17]
On 15 April 2009 the Treasurer, Wayne Swan and the Minister for
Health and Ageing, Nicola Roxon announced that in May, the
Government would, amongst other things introduce legislation to
validate the revenue collected between 27 April 2008 and 13 May
2009.[18]
Accordingly the Customs Tariff Validation Bill 2009 and the
Excise Tariff Validation Bill 2009 were introduced into the House
of Representatives on 12 May 2009.[19] These Bills were passed by the
Senate without amendment on 13 May 2009[20] and given the Royal Assent by the
Governor-General on the same day.[21] The Bills
Digest for the validation bills contains relevant
information.[22]
Position of significant interest groups
The precise impact of the alcopop excise increase in terms of
reducing risky drinking among young Australians remains
unclear.
Treasury figures indicate a 35 per cent reduction in the
consumption of alcopops for the period May 2008 to March 2009,
compared to the same period in the previous year.[23] In the same period, the
consumption of full-strength spirits rose by 18 per cent and beer
consumption increased by 5 per cent.[24] While these figures suggest that
there may have been some substitution from alcopops to other
alcoholic beverages, there was nevertheless an overall decrease in
the consumption of spirit drinks of 8 per cent. It is also the case
that, despite increases in the consumption of full-strength spirits
and beer, overall alcohol consumption declined by 0.5 per
cent.[25] This
contrasts with slightly increased alcohol consumption for the same
period in previous years.
Since the alcopop excise increase’s defeat in the Senate
on 18 March 2009, Independent Distillers has mounted a sustained
campaign against the increase. It continues to argue that the
increase can not solve the problem of risky drinking among young
people, and has cited the above figures as evidence of the excise
increase’s failure.[26] As Independent Distillers sees it, the fact that there
has been a decrease in the consumption of alcopops, paralleled by
an increase in the consumption of full-strength spirits and beer,
is a ‘bad result’. This shift in consumption patterns,
Independent Distillers argues, simply means that young people have
shifted to cheaper forms of alcohol product and, in the case of
unmeasured full-strength spirits, an alcohol product that is likely
to make drinking behaviour more risky.[27]
Independent Distillers has also argued against the alcopop
excise increase on other grounds. Were the increase to be approved,
Independent Distillers argues, this could force the company to
close its manufacturing plant at Laverton, Victoria, resulting in
the loss of 135 jobs and a further 150 jobs in related
industries.[28] In
a time of global financial crisis, Independent Distillers
maintains, the Government should not be pushing ahead with an
‘unfair tax’ that has the potential to put people out
of a job.
By contrast with Independent Distillers, health experts continue
to strongly support the alcopop excise increase as an important
first step in reducing alcohol-related harm among young
Australians.[29]
While health experts have consistently argued for a more
comprehensive approach to reducing alcohol-related harm in
Australia, they nevertheless maintain that results such as those
presented above suggest that the tax represents ‘a move in
the right direction’.[30] For example, the Royal Australian College of
Physicians has argued that the increase ‘has a sound evidence
base’ and that ‘preliminary evidence suggests that its
effect has been positive’.[31] Many health experts would appear to agree that
the positives of the measure outweigh the negatives. Indeed, one
group of health experts has gone so far as to state that ‘the
federal government is to be applauded for its decision to
re-introduce the ‘alcopops’ tax Bill to
Parliament’.[32]
After the Budget and during the debates on the validation bills
there have been further considerations of the issues by the
relevant political players, with Mr Turnbull being reported as
indicating that the Coalition would give support to the bills,
partially on the basis that he had argued in support of increased
taxation of tobacco and would support the increased levies on
alcopops as a matter of consistency[33] and also because the budgetary
situation required its support.[34]
The Coalition continues to assert that the alcopop excise
increase is a ‘tax grab’, and not a health measure, as
claimed by the Government. Nevertheless, on 22 June 2009, Shadow
Minister for Health and Ageing, Peter Dutton indicated that, given
the ‘dire budgetary context’, the Coalition would
‘act responsibly’ and ‘not oppose [the alcopop
excise and customs tariff] Bills’.[35]
When the amended ‘alcopops’ bills were defeated,
both the Senators for the Greens and independent Senator Nick
Xenophon urged the Government not to reneg on its anti-binge
drinking promises in the event that the Coalition ends up
supporting the ‘alcopops’ excise and customs tariff
rises on the reintroduction of the bills.[36]
In an interview to ABC 2 on 23 June 2009 Nicola Roxon, the
Minister for Health and Ageing indicated that the Government would
deliver on those commitments.[37]
Senator Fielding issued a Press Release in response to reports
of the Coalition’s change of heart accusing the Coalition of
being fearful of a double dissolution and arguing that this change
of direction was inadvisable because ‘bad policy is always
bad policy’.[38]
There have been lengthy debates and discussions as to whether
the failure to pass the alcopops bills a second time could
constitute a double dissolution trigger. The bills are in a
different form[39]
to those initially introduced into the Parliament. However
the government amendments which were approved in the House of
Representatives and then the Senate’s consideration of the
amended bills (in identical form to the bill as now reintroduced)
would satisfy the constitutional requirement for a double
dissolution—that is, that a ‘proposed law’ has
been rejected by the Senate and then reintroduced three months
later and rejected again.[40]
At an earlier stage of the debate there had been suggestions by
the Clerk of the Senate, Mr Harry Evans, and members of the
Coalition, in particular the Shadow Attorney-General, Senator
George Brandis, that the reintroduced bills could not satisfy the
constitutional requirements of section 57.[41] They argued the passage of
legislation intervening between the bills’ first introduction
and their subsequent reintroduction (that is the legislation
temporarily validating the collection of the excise) could prevent
the reintroduced bills from constituting a constitutionally valid
trigger for a double dissolution. This intervening event could
operate to thwart section 57 even if the reintroduced bills
satisfied the requirement for identity of text and the requisite
passage of time before reintroduction. This issue was
examined in a Research
Paper which suggested that a difference based on a change in
circumstance rather than a change in text is unlikely to constitute
a barrier to the use of such a Bill as a trigger for a double
dissolution.[42]
Were the bills to be rejected again by the Senate they could,
therefore, have constituted grounds for a request by the Prime
Minister to the Governor-General for a double dissolution.
Despite the extensive speculation, the matter is unlikely to
arise with respect to these bills, both because the Coalition has
indicated they will support the bills and because Mr Rudd has
rejected the proposition that the Government might go to an early
election.[43]
At the time of writing, although the Bills seem likely to pass
unobstructed through the Senate, the following timeframes are of
relevance to any bills which could constitute a double dissolution
trigger. The current House of Representatives was elected on 24
November 2007. Its term is for three years, timed from its first
sitting after the election, 12 February 2008, so the House will
expire through the effluxion of time on 11 February 2011. Under the
timetable for elections set out in the Constitution and the
Commonwealth Electoral Act 1918, the last possible date
for a House of Representatives election is 16 April 2011.[44]
A double dissolution trigger does not have to be used as soon as
it is created, but it must occur six months before the end of the
term of the House. This means that the announcement of a double
dissolution would have to take place by 11 August 2010. After
the double dissolution has occurred there can be a passage of time
before the subsequent election must take place, so that a double
dissolution election could take place as late as 16 October
2010.[45]
According to the Explanatory Memorandum financial implications
of the increased tax on certain alcoholic beverages not exceeding
10 per cent by volume of alcohol (both through excise and
excise-equivalent customs tariff increases) is predicted to
be:[46]
|
|
|
|
|
|
|
|
Australian Taxation Office
|
Nil
|
$31.79m
|
$254.68m
|
$259.89m
|
$264.96m
|
|
Australian Customs Service
|
Nil
|
$36.65m
|
$144.26m
|
$109.61m
|
$132.94m
|
|
Impact on fiscal balance
|
Nil
|
$68.44m
|
$398.93m
|
$369.5m
|
$397.9m
|
Similarly, financial implications of the amendment to the
definition of beer and grape wine product is predicted to
be:[47]
|
|
|
|
|
|
|
|
Impact on fiscal balance
|
Nil
|
Nil
|
$30m
|
$30m
|
$30m
|
Item 1 of Schedule
1 of the Bill amends the Schedule to the Excise Tariff Act
to increase the rate under item 2 from $39.36 to $66.67.
Item 1 of Schedule 2 of the
Bill amends the Excise Tariff Act to repeal the existing definition
of ‘beer’ and substitutes the
proposed definition. The purpose of these amendments is to
ensure that products which mimic spirit-based RTDs are subject to
the same tax rate as RTDs.
The proposed definition sets a combination of minimum limits on
bitterness and maximum limits on sugar content that must be present
in the final beverage. Amongst other things,
‘beer’:
- can contain hops, extracts of hops or other bitters such that
it has international bitterness units of not less than 4.0:
proposed paragraph (b)
- but only must not contain more than 4 per cent weight
of sugars:[48]
proposed paragraph (c)
- must not have had artificial sweetener added to it:
proposed paragraph (d)
- may have added to it at any time other substances, including
flavours[49] but
any substance which contains alcohol must not add more than 0.5 per
cent to the total volume of the final beverage:
proposed paragraph (e), and
- will contain more than 1.15 per cent by volume of alcohol:
proposed paragraph (g).
Item 3 of Schedule 2 is an
applications provision which provides, for the avoidance of doubt,
that the amendments in the Excise Tariff Act apply to beverages
manufactured or produced on or after the commencement of the
item.
Members, Senators and Parliamentary staff can obtain further
information from the Parliamentary Library on (02) 6277 2505
(Matthew Thomas), (02) 6277 2680 (Kirsty Magarey) or (02) 6277 2434
(Paula Pyburne).
Dr Matthew Thomas
Paula Pyburne
Kirsty Magarey
24 June 2009
Bills Digest Service
Parliamentary Library
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