SUMMARY OF ALTERATIONS

EXCISE TARIFF PROPOSAL (No. 1) 2023

CUSTOMS TARIFF PROPOSAL (No. 2) 2023

Reasons for changes: To encourage a decline in smoking within the Australian community and to reduce consumption of tobacco goods by effectively increasing rates of duty for tobacco goods

Date of effect: 1 September 2023 (unless in relation to that date, subsection 6AA(7) of the Excise Tariff Act 1921 and subsection 19AB(7) of the Customs Tariff Act 1995 have the effect of replacing a rate of duty on a later day, in which case the date of effect is that later day).

Alterations to the Excise Tariff Act 1921

Alterations to the Customs Tariff Act 1995

A duty of excise (excise duty) is a duty imposed on fuel, alcohol and tobacco produced in Australia. When these types of goods are imported, they are known as excise‑equivalent goods under the Customs Acts (within the meaning of the Customs Act 1901), and are subject to a duty of customs (customs duty). The rate of excise duty that applies to fuel, alcohol and tobacco that are locally‑produced goods is equivalent to the rate of customs duty that applies to excise‑equivalent goods that are imported into Australia.

In the 2023‑24 Budget, the Government announced increases to the excise duty and customs duty on tobacco goods, consistent with the priorities of the National Tobacco Strategy 2023‑2030 and related initiatives. This is achieved through two measures.

Firstly, the alterations proposed amends section 6AA of the Excise Tariff Act 1921 (Excise Tariff Act) and 19AB of the Customs Tariff Act 1995 (Customs Tariff Act) to increase the excise duty for all tobacco goods and customs duty for all tobacco products by 5% per year for 3 years starting from 1 September 2023, in addition to the current indexation to Average Weekly Ordinary Time Earnings. “Tobacco goods” means goods mentioned in subitem 5.1, 5.5 or 5.8 of the table in the Schedule to the Excise Tariff Act and “tobacco products” means goods classified to heading 2401, 2402 or 2403 or subheading 2404.11.00 (excluding goods classified to subheading 2402.90.00 or 2403.99.10) of Schedule 3 to the Customs Tariff Act.

Secondly, the alterations proposed amend section 6AAB of the Excise Tariff Act and 19ACA of the Customs Tariff Act to effectively increase the rate of duty for tobacco goods that are subject to the per kilogram excise duty (being those classified to subitem 5.5 in the Schedule to the Excise Tariff Act), and for goods classified to tariff subheadings 2401.10.00, 2401.20.00, 2401.30.00, 2402.10.80, 2402.20.80, 2403.11.00, 2403.19.90, 2403.91.00, 2403.99.80 or 2404.11.00 in the schedules listed in 19ACA(1) of the Customs Tariff Act, annually for 4 years from 1 September 2023. This is achieved by lowering the weight conversion factor in the excise and customs duty calculation formulae. This will broadly align the tax treatment of tobacco goods subject to the per kilogram excise duty with the tobacco content in cigarettes that are subject to the per‑stick excise duty and will align the treatment of tobacco products that are subject to the per kilogram customs duty and those subject to the per-stick customs duty.

The proposed alterations apply in relation to goods entered for home consumption on or after 1 September 2023, or if in relation to that date, subsection 6AA(7) of the Excise Tariff Act and subsection 19AB(7) of the Customs Tariff Act have the effect of replacing a rate of duty on a later day, in which case the date of effect is that later day.