Commonwealth Numbered Regulations - Explanatory Statements

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TOBACCO CHARGE (NO. 1) (RATE OF CHARGE) REGULATIONS (AMENDMENT) 1997 NO.90

Statutory Rules 1997 No. 90

Issued by the Authority of the Assistant Treasurer

Tobacco Charge Act (No. 1) 1955

Tobacco Charge (No. 1) (Rate of Charge) Regulations (Amendment)

Subsection 6(1) of the Tobacco Charge Act (No. 1) 1955 (the Act) provides that the Governor-General may make regulations which prescribe the rate of tobacco charge, provided that the total rate does not exceed six cents. Subsection 6(2) of the Act provides that in making regulations which set the rate of tobacco charge, the Governor-General must take into account any recommendation made to the Minister by the Australian Tobacco Board.

In 1990 the Australian Tobacco Board changed its name to the Australian Tobacco Marketing Advisory Committee (ATMAC). However, ATMAC was abolished on 7 April 1997, when its founding legislation, the Tobacco Marketing Act 1965, was repealed. Since ATMAC has been formally abolished, there is no body that can make recommendations that the GovernorGeneral must take into account under subsection 6(2) of the Act. Therefore, the GovernorGeneral can now make regulations under subsection 6(1) of the Act without the need for any industry body recommendation.

The Act is one of the three Tobacco Charge Acts (No. 1-3) 1955, which impose tobacco charge on certain transactions with tobacco leaf grown in Australia- Broadly speaking, the charge is imposed on transactions such as sale or purhase by a manufacturer or the use in manufacturing by a grower. This is provided that the tobacco has not already been subject to the charge. The proposed regulations under the Act set the rate of tax for each of the Tobacco Charge Acts (Nos. 1-3)..

The regulations will increase the rate of tobacco charge from 3.2 cents per kilogram of tobacco leaf to 4.2 cents per kilogram of tobacco leaf, with effect from the date of gazettal.

Tobacco charge used to be levied in two parts. The first part of the charge, imposed by subregulation 4(1) was to raise funds for FATMAC. The second part of the charge, imposed by subregulation 4(2), is to raise funds for the Tobacco Research and Development Corporation (TRDC) for research. However, due to the winding up of ATMAC the charge imposed by subregulation 4(1) has been and will continue to be zero. The charge is now effectively to fund the TRDC.

The Government has decided that the existing, charge should be increased by one cent per kilogram of tobacco leaf. This increase is to help ensure that the research needs of the industry, both present and future, continue to be met. This increase has the support of the TRDC.

Details of the amendments to the Regulations are as follows:

Regulation 1 - provides for the amendment of the Regulations and the note to Regulation 1 provides that these regulations commence on the date of gazettal.

Regulation 2 - amends subregulation 4(2) of Tobacco Charge (No. 1) (Rate of Charge) Regulations. Subregulation 4(2) prescribes the amount for the purposes of funding the TRDC. The amount prescribed for this purpose will be increased from 3.2 cents to 4.2 cents.