House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)

Chapter 1 - Aviation kerosene

Excise tariff amendment bill (No. 1) 2001

Outline of chapter

1.1 This chapter explains an amendment to the Excise Tariff Act that changes the rate of excise duty for kerosene used as fuel in aircraft (commonly known as avtur).

1.2 Schedule 1, Part 1, item 1 substitutes a new rate of excise duty for Excise Tariff subitem 11(A) of the Schedule to the Excise Tariff Act.

Context of reform

1.3 As part of the airports privatisation process, the Government introduced a framework for economic regulation of airports in 1997. These regulatory arrangements have been designed to achieve an appropriate balance between public interest and private commercial objectives. The ACCC has primary responsibility for implementing and administering the framework of economic regulation at the privatised airports and Sydney airport.

1.4 These regulatory arrangements at airports are more extensive than originally envisaged and funded for. To provide the additional funding required, a measure was announced in the 2000-2001 Budget to increase the rates of excise and customs duty for avtur by 0.036 cents per litre to 2.795 cents per litre. An increase in the rates of excise and customs duty for avtur was considered an administratively efficient method of cost recovery. The alteration to the Schedule to the Excise Tariff Act gives effect to this budget measure.

Summary of new law

1.5 Excise Tariff subitem 11(A) of the Schedule to the Excise Tariff Act is repealed and substituted with a new rate of excise duty of 2.795 cents per litre.

Detailed explanation of new law

1.6 The Schedule to the Excise Tariff Act is altered by repealing subitem 11(A) and substituting the subitem with a new rate of excise duty of 2.795 cents per litre. The substituted rate is taken to have effect on and from 13 May 2000.

Customs Tariff Amendment Bill (No. 2) 2001

Outline of chapter

1.7 This chapter explains an amendment to the Customs Tariff Act that changes the rate of customs duty for kerosene used as fuel in aircraft (commonly known as avtur).

1.8 Schedule 1, Part 1, item 1 substitutes a new rate of customs duty for tariff subheading 2710.00.40 of Schedule 3 to the Customs Tariff Act.

Context of reform

1.9 As part of the airports privatisation process, the Government introduced a framework for economic regulation of airports in 1997. These regulatory arrangements have been designed to achieve an appropriate balance between public interest and private commercial objectives. The ACCC has primary responsibility for implementing and administering the framework of economic regulation at the privatised airports and Sydney airport.

1.10 These regulatory arrangements at airports are more extensive than originally envisaged and funded for. To provide the additional funding required, a measure was announced in the 2000-2001 Budget to increase the rate of excise and customs duty for avtur by 0.036 cents per litre to 2.795 cents per litre. An increase in the rates of excise and customs duty for avtur was considered an administratively efficient method of cost recovery. The alterations to Schedule 3 to the Customs Tariff Act give effect to this budget measure.

Summary of new law

1.11 The rate of customs duty for tariff subheading 2710.00.40 in column 3 of Schedule 3 to the Customs Tariff Act is repealed and substituted with a new rate of duty of 2.795 cents per litre.

Detailed explanation of new law

1.12 Schedule 3 to the Customs Tariff Act is altered by repealing the rate of customs duty in column 3 of subheading 2710.00.40 and substituting a new rate of 2.795 cents per litre. The substituted rate is taken to have effect on and from 13 May 2000.