Explanatory Memorandum
(Circulated by authority of the Minister for Customs and Consumer Affairs, the Hon. Warren Truss MP)FINANCIAL IMPACT STATEMENT
The reduction in duty on avgas has financial implications for Airservices Australia , the general aviation sector of the aviation industry, consumers of services provided by the general aviation industry, and fuel company suppliers of avgas.
Airservices Australia
The reduction in duty will reduce Airservices' revenue by approximately $0.7M in 1997-98. Airservices has assessed the cost of providing air navigation services to avgas powered aircraft and the level of activity by these aircraft (and hence consumption of avgas) in 1997-98 and concluded that a reduction in the rate of duty of 0.6 cents per litre was warranted. The expected fall in revenue matches Airservices' anticipated reduction in the cost of providing services to avgas powered aircraft. Therefore, the financial impact is expected to be neutral.
General aviation industry
Most operators in the general aviation sector use avgas powered piston engined aircraft.
The reduction in duty will deliver savings of around $0.7M to operators of avgas powered aircraft The operators who stand to benefit include charter operators, flying training schools, agricultural aircraft operators, private aircraft owners and sport aviation participants.
The financial impact on these operators will be positive.
Consumers
There is potential for consumers of services provided by avgas powered aircraft owners to benefit from reduced prices if savings in fuel costs are reflected in lower prices. Potential beneficiaries include student pilots, farmers and passengers flying with smaller airlines.
There is a potential positive, but only small, financial impact on consumers.
Fuel companies
Fuel companies bear an administrative cost in implementing new prices as a result of changes in duty. The cost is relatively small.
The changes to the relevant duty rates contained in the Bill are otherwise neutral in effect.