Index

Bills Digest no. 166 2008–09

Customs Tariff Validation Bill 2009

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
Concluding comments
Contact officer & copyright details

Passage history

Purpose

The purpose of the Bills is to validate all duties demanded or collected before 14 May 2009 because of the Customs Tariff Proposal (No. 1) 2008 and the Excise Tariff Proposal (No. 1) 2008 so that they are taken to have been lawfully imposed and lawfully demanded or collected.[1]

History of the Bills

Background

In the Budget for the 2008–09 financial year, the Treasurer, Wayne Swan announced a proposed increase in the tax on ready-to-drink beverages (colloquially referred to as ‘alcopops’) of some 70%.[2]  The measure would create an ongoing gain to revenue estimated at $3.1 billion from 27 April 2008 and over the forward estimates period.[3] 

The increase in excise was presented by the Government as a part of its broader strategy to tackle the problem of ‘risky drinking’ among young Australians, and especially young women, on the grounds that ‘alcopops’ are recognised as being young Australian women’s drink of choice.[4]

Introduction of tariff proposals

The ‘alcopops’ tax changes were 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]

Validating a tariff proposal

A tariff proposal is not legislation. It is an executive instrument. A proposal does not legally alter the relevant legislative tariff[8] and it is arguable that caselaw suggests 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.[9]

However, using the example of the practical operation of the customs system, customs officials could simply refuse to release the goods which are the subject of a tariff proposal unless the customs duty was paid according to the proposal.  In such a case, section 226 of the Customs Act 1901 prevents the importer of the goods who refuses to pay the tariff in the proposal from taking action against the customs officials for wrongfully withholding the goods.[10]  According to section 226, that prohibition lasts for the period of 12 months from the date of the proposal or until the end of the parliamentary session, whichever is the earlier.  This 12 month period provides the basis for the convention that governments pass validating legislation within 12 months of a proposal coming into effect.

Not withstanding the doubtful legal force of tariff proposals as mentioned above, the content of the vast majority of such proposals are uncontroversial, and thus the amended duties are presumably paid in the expectation that validating legislation will be passed within the 12 month period.

Response to the tariff proposals

When the tariff proposals were gazetted, the then leader of the Coalition, Dr Brendan Nelson threatened to block the proposed tax rise, branding it a revenue grab.[11]  The consequence of the coalition’s determination to vote against the legislation in the Senate was that the Government needed the votes of all the Green senators, as well as those of the two independent senators for the relevant legislation to be passed.

The Customs Tariff Amendment (2009 Measures No. 1) Bill 2009 and the Excise Tariff Amendment (2009 Measures No. 1) Bill 2009 were introduced in the House of Representatives on 11 February 2009.  The relevant Bills Digest provides useful information.

In the period leading up to the crucial vote on the legislation on 18 March 2009 there was considerable debate about:

• whether the increased tax on alcopops had actually limited binge drinking by young people[12] and
• whether in the event the legislation was not passed, the amount of the tax already collected, (being approximately $290 million),[13] would need to be refunded and if so, to whom it would be refunded.[14]

The Government took the view that the monies collected would have to be returned to the distillers.[15]

The coalition argued that the money should be ‘allocated to proper education and to proper alcohol programs that will have a real impact on binge drinking’.[16]

Whilst the public position of the Distilled Spirits Industry Council of Australia was that the money collected to date should be used for preventative health measures by the Government, rather than being returned to the industry, it was reported that Bacardi Lion, the maker of Bacardi Breezers, intended to make an application to the Australian Taxation Office to have the amount of additional excise that it had paid, refunded.[17]

In the context of this debate the Minister for Health and Ageing, Nicola Roxon, 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 … 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.[18]

However, Senator Fielding ultimately voted against the proposed legislation in the Senate and the Bills were defeated.

Introduction of these Bills

On 15 April 2009 the Treasurer, Wayne Swan and the Minister for Health and Ageing, Nicola Roxon announced that in May, the Government would:

• introduce a new tariff proposal with effect from 14 May 2009, ensuring the alcopops measure remains in place into the future
• introduce legislation to confirm the measure in the same session of Parliament, and
• introduce legislation to validate the revenue collected between 27 April 2008 and 13 May 2009.[19]

In response, Peter Dutton MP stated that:

The Coalition will support legislation to validate the revenue collected to date. We call on the Government to spend all of the money collected so far on alcohol education, prevention and rehabilitation measures.[20]

Similarly Senator Rachel Siewert on behalf of the Australian Greens stated that:

The decision by the Federal Government to reintroduce the 'Alcopops' tax was today welcomed by the Australian Greens as a common sense move to better managing alcohol-related harm…

The Government has also made the right decision by retaining the $360 million already raised, and ensuring it is not returned to the distillers.[21]

Accordingly the Bills which are the subject of this Digest were introduced into the House of Representatives on 12 May 2009,[22] passed by the Senate without amendment on 13 May 2009[23] and given the Royal Assent by the Governor-General on the same day.[24]

Financial implications

According to the Explanatory Memorandum[25] these measures will validate revenues already collected to the value of:

Main provisions

Customs Tariff Validation Bill

Item 3 of the Bill provides that all duties of customs demanded or collected from 13 May 2008 to 13 May 2009 inclusive arising from the tariff proposal of 13 May 2008 are taken to have been lawfully imposed and lawfully demanded and collected.[26]

Item 4 of the Bill provides all of the duties of customs which have been demanded or collected because of the notice of the tariff proposal which was published in the Gazette on 26 April 2008 have been lawfully imposed and lawfully demanded or collected.

Excise Tariff Validation Bill

Item 3 of the Bill provides that all duties of excise demanded or collected from 13 May 2008 to 13 May 2009 inclusive arising from the tariff proposal of 13 May 2008 are taken to have been lawfully imposed and lawfully demanded and collected.[27]

Item 4 of the Bill provides that all of the duties of excise which have been demanded or collected because of the notice of the tariff proposal which was published in the Gazette on 26 April 2008 have been lawfully imposed and lawfully demanded or collected.

Members, Senators and Parliamentary staff can obtain further information from the Parliamentary Library on (02) 6277 2434.

Contact officer and copyright details

Paula Pyburne
12 June 2009
Bills Digest Service
Parliamentary Library

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