Chapter 2
Background and overview of the Bill
Key provisions of the Bill
2.1
Schedule 1 of the Bill contains two items:
-
item 1 amends section 6 of the PMC Act to increase the rate of
the PMC from $47 to $55 with effect from 1 July 2012, and introduces annual
indexation of the PMC in accordance with CPI from 1 July 2013; and
- item 2 provides that the increased charge will apply to the
departure of a person from Australia on or after 1 July 2012, unless that
person departs on a ticket sold or issued prior to that date.
Background
2.2
The PMC was introduced in 1995 to replace departure tax. The PMC, which
is administered by the Australian Customs and Border Protection Service
(Customs and Border Protection) is levied under the PMC Act and collected under
the Passenger Movement Charge Collection Act 1978.[1]
2.3
A departure tax preceded the PMC and was introduced by the Departure
Tax Act 1978. Details of the departure tax were first announced in the 1978
budget speech by the Treasurer, with legislation later introduced by the
Minister for Immigration and Ethnic Affairs.[2]
The minister outlined the reasons for introducing the departure tax:
In the present tight budgetary situation it has been
necessary for the Government to consider avenues for raising additional
revenue. The tax on departures will make a useful contribution in this regard.
Many countries have taxes similar to the departure tax proposed for Australia.
Overseas visitors to this country, and many Australians travelling abroad, will
have had experience with payments of this kind.[3]
2.4
Since its introduction, departure tax has been used as a cost recovery
measure to recoup the notional cost of customs, immigration and quarantine
processing of passengers entering and leaving Australia, as well as the cost of
issuing short-term visas.
2.5
Over time, however, departure tax has moved from being used as a cost
recovery measure to becoming, at least in part, a general revenue raising
measure. In 2000, the Australian National Audit Office (ANAO) noted:
The PMC is levied under Commonwealth taxing powers and is now
applied partly as a general revenue raising source. As a consequence, the PMC is
no longer solely linked to cost recovery of Customs, Immigration and Quarantine
services.[4]
2.6
The ANAO further noted that, in law, the PMC is a tax.[5]
Rate changes to the departure
tax/passenger movement charge
2.7
The charge on passenger movements was introduced under the Departure
Tax Act 1978 as a departure tax. In 1995 the name of the tax was changed to
the passenger movement charge and the legislation was also changed to the Passenger
Movement Charge Act 1978.
2.8
Since the introduction of the charge on passenger movements, the rate
has been adjusted eight times. The table below sets out the history of the
changes to the rate of departure tax/PMC:
Table
2.1: History of changes to the departure tax/passenger movement charge (PMC)
Title of charge
|
Date commenced
|
Rate
|
Relevant legislation
|
Departure tax
|
24 October 1978
|
$10
|
Departure Tax Act 1978
|
Departure tax
|
1 October 1981
|
$20
|
Departure Tax Amendment Act 1981
|
Departure tax
|
1 July 1988
|
$10
|
Departure Tax Amendment Act 1988
|
Departure tax
|
1 August 1991
|
$20
|
Departure Tax Amendment Act 1991
|
Departure tax
|
1 January 1994
|
$25
|
Departure Tax Amendment Act 1993
|
PMC
|
1 January 1995
|
$27
|
Departure Tax Amendment Act 1994
|
PMC
|
1 January 1999
|
$30
|
PMC Amendment Act 1998
|
PMC
|
1 July 2001
|
$38
|
PMC Amendment Act 2001
|
PMC
|
1 July 2008
|
$47
|
PMC Amendment Act 2008
|
PMC
|
1 July 2012 (proposed)
|
$55
|
PMC Amendment Bill 2012
|
2.9
The rate of the PMC has been increased with each amendment to the
legislation, save for changes in 1988 when the tax decreased from $20 to $10.
The table below outlines the reasons for changing the rate of the departure
tax/PMC:
Table
2.2: Reasons for changes to the departure tax/passenger movement charge
Rate change
|
Rate
|
Reason for change
|
24 October 1978
|
$10
|
To recover the costs of customs, immigration and quarantine
operations at Australia's ports and airports.
|
1 October 1981
|
$20
|
The second reading speech noted only that the departure
tax had not been varied since 1978 when it was introduced.
|
1 July 1988
|
$10
|
To reflect a new government model of cost recovery for the
aviation industry.
|
1 August 1991
|
$20
|
To fund the promotion of Australia as a tourist destination.
|
1 January 1994
|
$25
|
To increase funding for promoting Australian tourism.
|
1 January 1995
|
$27
|
To achieve full cost recovery for customs, immigration and
quarantine processing at Australia's borders and the cost of issuing of
short-term visitor visas.
|
1 January 1999
|
$30
|
To help meet the additional costs associated with hosting the
Olympic Games in 2000.
|
1 July 2001
|
$38
|
To cover the increased cost of inspecting passengers, mail
and cargo to Australia as a result of increased quarantine intervention
dealing with foot and mouth disease.
|
1 July 2008
|
$47
|
To partially offset the costs of national aviation security
initiatives.
|
1 July 2012 (proposed)
|
$55
|
To fund the establishment of the Asia Marketing Fund.
|
Source: Ministers' second reading
speeches, 1978-2012
Collection arrangements
2.10
The PMC is levied on departures from Australia on commercial and charter
airlines and passenger ships. The PMC is collected under section 10 of the
Passenger Movement Charge Collection Act 1978. Customs and Border
Protection administers these arrangements.
2.11
The PMC remittance arrangements require the PMC to be levied at the time
a ticket is sold to a passenger and then remitted to Customs and Border
Protection by the airline or shipping companies within an agreed timeframe.[6]
2.12
Most carriers have a PMC remittance arrangement with Customs and Border
Protection and this process negates the need for passengers to pay the PMC
separately before departure. However, the PMC from passengers departing on
small itinerant flights (such as private planes) and sea craft is collected by
Customs and Border Protection directly from the passenger, captain or agent at
the point of departure.[7]
2.13
Provisions are made for the refund of the PMC in certain circumstances,
such as the departure not taking place, the person returning to Australia
without entering another country, or the charge being incorrectly applied.[8]
In these circumstances, the airline or shipping company is required to provide
a full refund. In the case that the remittance has already been paid by the
airline or shipping company to Customs and Border Protection, Customs and
Border Protection will reimburse the money to the transport company or directly
to the passenger.
Revenue raised by the passenger movement
charge
2.14
The following table shows the rate of the PMC, the revenue raised by the
PMC, and the number of international departures (air and sea) from 2005–06
to
2010–11. The table also includes the projected budget estimates for 2012–13 to
2015–16, taking into account the proposed rise of the PMC to $55 and its annual
indexation with CPI.
Table 2.3: Revenue
raised from passenger movement charge (PMC) and the number of international
departures, 2005–06 to 2015–16
Financial year
|
Rate of PMC
|
PMC revenue (millions)
|
Number of
international departures (air and sea) (millions)
|
2005–06
|
$38
|
$374.6
|
10.7
|
2006–07
|
$38
|
$393.2
|
11.2
|
2007–08
|
$38
|
$420.0
|
11.8
|
2008–09
|
$47
|
$502.8
|
12.0
|
2009–10
|
$47
|
$571.3
|
13.1
|
2010–11
|
$47
|
$615.5
|
14.1
|
2011–12
|
$47
|
$655.5 (projected)
|
14.9 (projected)
|
2012–13
|
$55 (proposed)
|
$793.8 (projected)
|
16.1 (projected)
|
2013–14
|
$5 +CPI (proposed)
|
$884.0 (projected)
|
16.9 (projected)
|
2014–15
|
$55+CPI (proposed)
|
$961.1 (projected)
|
17.9 (projected)
|
2015–16
|
$55+CPI (proposed)
|
$1 036.7 (projected)
|
18.8 (projected)
|
Source: Australian Customs
and Border Security Service, Annual Reports 2005–06, 2007–08, 2008‑09,
2009–10, 2010–11; Australian Customs and Border Protection Service, Portfolio
Budget Statement 2012–13, pp 113 and 127.
Reasons for proposed changes
2.15
The increase to the PMC proposed in the Bill was first announced as part
of the Commonwealth government's 2012–13 Budget.[9]
The increase to the PMC is intended to fund the establishment of the Asia
Marking Fund, which will promote Australia to growing tourism markets in Asia.
At the time of introducing the legislation, the Minister stated:
Sixty-one million dollars will be allocated to the fund,
which is aimed at supporting the promotion of Australia to growing markets in
Asia as a premium holiday and business travel destination.
It is estimated that, in less than a decade, there will be
100 million outbound travellers per annum from China alone. This fund will help
promote Australia as a touring and business destination in this important
market.[10]
2.16
The government also intends for the annual indexation of the PMC with
CPI to 'provide certainty to the tourism industry about future increases'.[11]
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