Bills Digest No. 20 1999-2000
Customs and Excise Amendment (Diesel Fuel Rebate Scheme) Bill 1999
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
Main Provisions
Concluding Comments
Endnotes
Contact Officer & Copyright Details
Customs and Excise Amendment (Diesel Fuel Rebate
Scheme) Bill 1999
Date Introduced: 22 June 1999
House: House of Representatives
Portfolio: Treasury
Commencement: The proposed
Customs and Excise Amendment (Diesel Fuel Rebate Scheme) Act 1999
commences after all the provisions in five A New Tax System
Acts listed in subclause 2(2) have commenced, and on the last day
on which any of those provisions commenced.
The measures in this Bill (the Rebates Bill) and in the
Diesel and Alternative Fuels Grants Scheme Bill 1999 (the Grants Bill)
implement the proposal in the A New Tax System (ANTS)(1) as modified
by the agreement between the Government and the Australian Democrats:
- to provide assistance to regional areas, by a Diesel and Alternative
Fuels Grants Scheme (DAFGS) to reduce the cost of diesel and certain
other fuels used in transporting goods and passengers,
and
- to extend the Diesel Fuel Rebate Scheme (DFRS) to additional activities
and other fuels, and to allow the full rebate to activities now receiving
only a part rebate.
The background to the Rebates Bill and the Grants Bill
is considered in the Bills Digest on the Grants Bill. Readers are therefore
invited to refer to the Bills Digest on the Grants Bill for information
on the background to this Bill.
Schedule 1 of the Rebates Bill has measures to amend
the Customs Act 1901.
Schedule 2 of the Rebates Bill has measures to
amend the Excise Act 1901.
Extension of rebate to fuels other than diesel
fuel
Item 1 of Schedule 1 and Item 1
of Schedule 2 insert a definition of diesel fuel into section 4(1)
of the Customs Act 1901 and section 4(1) of the Excise Act 1901
respectively. It includes any other like fuel of a kind that is prescribed
by regulations.
In the Grants Bill, clause 5 provides that diesel
fuel has the meaning given by the regulations. Further, alternative fuel
is defined in clause 5 of the Grants Bill to mean:
(a) compressed natural gas
(b) liquefied petroleum gas
(c) recycled waste oil
(d) ethanol oil
(e) canola oil
(f) such other fuel as is specified in the regulations.
Thus there is scope for the alignment of definitions
of diesel fuel in the Grants Act and the Rebates Act so that both definitions
include the fuels listed under alternative fuels or prescribed in regulations.
100 per cent rebate for duty paid on diesel for
rail transport and marine use
Item 3 of Schedule 1 inserts proposed
subparagraph 164(1)(ab) and proposed subparagraph 164(1)(ac) into
the Customs Act 1901 to enable a rebate of customs duty to be granted
to a person who purchases diesel fuel for use in rail transport or marine
use respectively in the course of carrying on an enterprise. Item 3
of Schedule 2 inserts proposed subparagraph 78(1)(ab)
and proposed subparagraph 78(1)(ac) into the Excise Act 1901
to achieve a similar result in respect of excise duty.
The definition of 'rail transport' inserted by Item
10 of Schedule 1 into subsection 164(7) of the Customs
Act 1901 includes light rail transport and transport by tram, but
does not include any rail transport relating to forestry. The definition
of 'marine use' inserted by Item 9 of Schedule 1 into subsection
164(7) of the Customs Act 1901 includes the use of vehicles in
or on fresh water, but does not include any use relating to forestry.
Item 8 of Schedule 2 amends section 78A(7) of the Excise
Act 1901 to provide for the application of the definition of 'rail
transport' and 'marine use' in subsection 164(7) of the Customs Act
1901 for the purposes of section 78.
The rebate is not applicable for diesel fuel purchased
for the purpose of propelling a road vehicle on a public road.
Item 5 of Schedule 1 inserts proposed
paragraphs 164(5)(ba) and paragraphs 164(5)(bb) into the Customs
Act 1901 to enable the entire duty paid on diesel fuel purchased for
rail transport or marine use to be given as a rebate. Item 5 of
Schedule 2 inserts proposed paragraphs 78A(5)(ba) and
paragraphs 78A(5)(bb) into the Excise Act 1901 to achieve a
similar result.
Varying of rebate by the Minister for diesel
used in primary production
Under section 164(5A) the Minister may by notice in writing
declare that the rate of rebate payable under subsection 164(1) in respect
of any diesel fuel may be a rate higher than the rate specified in subsection
164(5).
Item 6 of Schedule 1 inserts proposed
subsection 164(5AAA) to the Customs Act 1901 to provide that
the Minister may declare a different rate for use of diesel fuel in primary
production other than forestry and a different rate for use of diesel
fuel in forestry. However, the rate declared by the Minister for use of
diesel fuel in forestry must be 35/43 of the rate declared for use of
diesel fuel in primary production other than forestry.
The excise on diesel as from 1 February 1999 is 43.355
cents per litre. The rate of rebate used in primary production - which
includes forestry - is 35.027 cents per litre. The rate of 35/43 thus
derives from the existing treatment of forestry. However, under the Bill,
forestry will be disadvantaged relative to primary production other than
forestry. Currently, agriculture, fishing and forestry are eligible for
the same amount of rebate, that is, 35.027 cents per litre. Under the
new scheme, the parity between forestry and agriculture will be removed
because of the application of the rate of 35/43 to forestry but not to
other forms of primary production. To restore parity between forestry
and primary production other than forestry would require the same amount
of rebate for both.
Item 6 of Schedule 2 inserts proposed
subsection 78(5AAA) to the Excise Act 1901 to achieve a similar
result.
Termination of DFRS
Item 2 of Schedule 1 inserts proposed
subsection 164(1AB) to provide that the rebate is not payable:
- for a purchase of diesel fuel on or after 1 July 2002, or
- as a result of an application for a rebate received more than 5 months
after 1 July 2002.
Item 2 of Schedule 2 inserts proposed
subsection 78A(1AA) to achieve a similar result.
On the termination of the DFRS and the DAFGS, the Government
intends to combine the DFRS and the DAFGS into one scheme - the Energy
Grants (Credits) Scheme as stated in clause 4 of the Grants Bill.
The stated purposes of the latter scheme - as set out in subclauses
4(2) and (3) of the Grants Bill - are to encourage the use of 'cleaner'
fuels, 'maintain entitlements' under the DFRS and DAFGS and, in the case
of diesel, to restrict entitlements to ultra low sulphur fuel from 1 January
2006.
The measures in the Rebates Bill and the Grants Bill
on the face of it provide for two schemes for reducing the cost of customs
and excise duty on diesel - the DFRS for off-road use, and the DAFGS proposed
in the Grants Bill for on-road use in regional areas. However, on one
view, the DFRS and the DAFGS must be considered together in the overall
scheme for the imposition of diesel fuel customs and excise duty as these
two schemes have the effect of reducing the customs and excise duty on
diesel fuel and alternative fuels. They cannot be considered as two independent
schemes as they provide rebates and grants which reduce the duty payable
on diesel fuel under the Customs Act 1901 and the Excise Act
1901.
Eligibility for the grants under the Grants Bill would
be limited to vehicles weighing between 4.5 and 20 tonnes travelling 'in
service of regional areas', and to all vehicles weighing more than 20
tonnes. 'Regional areas' excludes 'metropolitan areas'. Clause 10 of
the Grants Bill specifies that diesel used in major metropolitan areas
is not subject to the grant. However, the definition of 'metropolitan
area' in clause 6 of the Grants Bill excludes the Hobart metropolitan
area and in consequence the whole of Tasmania falls within the regional
areas assisted by the DAFGS.
The classification of the whole of Tasmania for grants
under DAFGS raises the question whether in the overall application of
the customs and excise duty on diesel fuel the requirements in section
51(ii) of the Constitution that there should be no discrimination between
States have been complied with.
The alternative view is that the DAFGS is an independent
scheme outside the tax system for the imposition of customs and excise
duties on diesel fuel. In this view the measures in the Grants Bill regulate
transport using diesel or alternative fuels and is probably based on the
trade and commerce power in section 51(i) of the Constitution. Here again,
section 99 of the Constitution requires that any law or regulation with
respect to trade and commerce shall not give preference to one State or
any part thereof. The classification of the whole of Tasmania as a regional
area in the Grants Bill may be construed as showing a preference in breach
of section 99.
The reader is referred to the Concluding Comments in
the Bills Digest on the Grants Bill where these issues are examined.
- Tax Reform: not a new tax; a new tax system: The Howard Government's
Plan for a New Tax System (ANTS); circulated by the Hon. Peter Costello
MP, Treasurer of the Commonwealth of Australia (AGPS) August 1998.
Bernard Pulle and Richard Webb
6 August 1999
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.
IRS staff are available to discuss the paper's contents with Senators
and Members
and their staff but not with members of the public.
ISSN 1328-8091
© Commonwealth of Australia 1999
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, 1999.
|
