Australian Parliamentary Library Bills Digests Australian Parliamentary Library Bills Digests[Index] [Search] [Download] [Help]
Excise Tariff Amendment Bill (No. 1) 1997
Date Introduced: 5 March 1997
House: House of Representatives
Portfolio: Industry, Science and Tourism
Commencement: Formal provisions and item 5 of the Schedule
commence on Royal Assent. Items 1 and 2 of the Schedule are to
be taken to have commenced on 3 February 1996, item 3 of the Schedule
will commence on 1 August 1996 and item 4 will commence on 3 February
1997.
The Bill will substitute new items into the Excise Tariff Act 1921 that will retrospectively ensure that the amount of excise collected on certain alcoholic beverages is valid. The Bill will also ensure that excise is payable on such beverages in the future.
The rationale given by the Government in the Second Reading Speech to the Bill for the proposed amendments is:
In November 1994, Carlton and United Breweries (CUB) commenced the manufacture of the product known as 'Subzero Alcoholic Soda'. At that time, the beverage was made from spirit obtained from the de-alcholisation of beer and had approximately 5.5% alcohol content. The Australian Customs Service (ACS) considered 'Subzero' excisable under sub-item 2(H) of the Schedule to the Tariff Act as a spiritous beverage. CUB appealed the decision of the ACS to the Administrative Appeals Tribunal (AAT).
On 7 June 1996, the AAT determined that the production of 'Subzero', with such a low alcohol content by volume, could not be described as spiritous and was therefore not excisable under sub-item 2(H). The decision was based on what the AAT considered is commonly regarded as the definition of 'spirit' in the community, which is a strong alcoholic liquor usually containing not less than 37% alcohol by volume.
The ACS is also appealing this decision in the Federal Court and has continued to impose excise duty under sub-item 2(H) on all other similar low alcohol beverages.
In order to ensure the continuing exciseability of all beverages containing distilled alcohol, it is proposed to amend the Tariff Act to:
(i) delete all references to 'spiritous beverages' in the Schedule and item 2 (item 1 of Schedule 1 refers); and
(ii) clarify that excise liability is imposed upon all beverages which contain distilled alcohol (except fortified wine)(new sub-item 2(H), item 2 of Schedule 1 refers).
By removing the term 'spiritous' from the present sub-item 2(H), this will remove any connotation as to the strength that an alcoholic beverage must be before it will be excisable. All such beverages will continue to be excisable regardless of their alcohol content and the excise duty will be calculated according to the alcohol content of the beverages.
On 13 May 1997 the Bill was referred to the Senate Economics Legislation Committee. The report of the Committee was presented in the Senate on 18 June 1997.
Industry submissions to the Committee were without exception opposed to the Bill. Bodies opposing the Bill included: the Distilled Spirits Industry Council of Australia Inc; the Bundaberg District Tourism and Development Board; United Distillers Australia Ltd; the Institute of Chartered Accountants; the Law Council of Australia; and the Bundaberg Distilling Company Pty Ltd.
The spokesperson for the Distilled Spirits Industry Council of Australia Inc in evidence to the Committee stated:
The bill arbitrarily reimposes excise on one market competitor–that is, pre-mixed spirits–whilst direct competitors with different alcohol bases, designer drinks, and wine coolers remain non-excisable. Moreover, the bill establishes unequivocally for the first time that excise is only to be levied on the distilled spirit component of pre-mixed drinks. All manufacturers are now looking at ways of reformulating their products so that less spirit is incorporated.(1)
Submissions to the Committee from United Distillers (Aust.) Limited (UDA) listed a number of consequences of the Bill, including:
While recommending that the Bill be passed, the Majority Report of the Committee recommended that the Government undertake an immediate review which should look at the equity of tax treatment between ready–to–drink products and designer drinks in the P5 category with particular reference to:
Two Minority Reports were presented in respect to the Bill. The Australian Labor Party in its Minority Report recommended that the Government use the opportunity of this legislation to address the anomalies contained in the current excise regime. The Australian Democrats in their Minority Report indicated that they would seek to amend the Bill, or support amendments to the Bill, which meet the most significant of the problems identified.
Item 2 of Schedule 1 of the Bill will substitute a new item 2 into the Schedule of the Excise Tariff Act 1921 (the Principal Act) to insert a list of beverages containing spirits that are subject to excise. The main change between the current item 2 and the proposed item 2 is that the new Item contains a reference to 'beverages (other than beverages comprised solely of fortified wine) containing distilled alcohol'.
Items 3 and 4 of Schedule 1 also substitute new item 2 into the Principal Act. The reason for the multiple new item 2 is that they will have effect from 3 February 1996, 1 August 1996 and 3 February 1997. This reflects the indexing of the rate of exercise every six months and the desire to have the amendments applying from February 1996.
The Bill was amended in the Senate to insert a further item 2 that will have effect from the day the Bill receives Royal Assent. The proposed item differs from the other proposed items in that for beverages containing distilled alcohol a lower rate will apply where the alcohol is attributable to brandy and different rules will apply where the beverage falls within Food Standard P5. (Food Standard P5 deals with alcoholic beverages not dealt with in the other categories of Part P of the Food Standards. The other categories in Part P are beer, wine, spirits and liqueurs, sparkling wine and fortified wine.)Where a drink falls within P5, it will be subject to a rate of excise approximately 50% lower where they do not contain more than 5% alcohol.
Item 5 of Schedule 1 provides that if excise is payable on alcohol after 3 February 1997 the amount of excise is to be determined according to the amendments made by this Bill even if an application for review has been made to the Administrative Appeals Tribunal (AAT), an application has been made for a refund or court proceedings have been commenced in regard to the excise payable. However, if the AAT has made a determined and a refund has been paid, no action is to be taken to seek to recover the amount refunded.
Chris Field & Ian Ireland
31 October 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.
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: 5 November 1997