Explanatory Memorandum
(Circulated by authority of the Hon Peter Dutton MP, Minister for Home Affairs)OUTLINE
The Australian Government announced in the 2018-19 Budget that it would tighten tobacco border controls by introducing a prohibited import control for tobacco products through the Black Economy Package - Combatting Illicit Tobacco (the Black Economy Package).
On 26 October 2018, the Customs Amendment (Collecting Tobacco Duties at the Border) Act 2018 received the Royal Assent. On its commencement on 1 July 2019, this Act will amend the Customs Act 1901 (the Customs Act) to require tobacco importers to pay customs duty on tobacco products upon importing such tobacco products into Australia. There will no longer be an available option to enter imported tobacco products into a licensed warehouse to defer the payment of duties.
In addition, from 1 July 2019, tobacco products will be prohibited imports under the Customs (Prohibited Imports) Regulations 1956. As such, tobacco products will only be able be imported into Australia with a valid import permit (except for international travellers using duty free allowances, specialty tobacco items such as cigars and smokeless tobacco and tobacco products as approved for importation into Australia by the Minister and listed in a legislative instrument). Tobacco products imported without a valid permit would be a prohibited import and would be able to be seized at the border without warrant.
To ensure efficient border operations can continue under these new arrangements for tobacco products, additional amendments to the Customs Act are now proposed. The Customs Act currently requires seized prohibited imports to be stored for a minimum of 30 days before they can be disposed of. Managing tobacco products as a prohibited import will result in a demonstrable increase of work at the border that may impact the Australian Government's ability to effectively regulate tobacco permit conditions and other border operations.
The amendments in this Bill would empower the Comptroller-General of Customs to cause tobacco products seized as prohibited imports to be dealt with in a manner he or she considers appropriate, including the immediate destruction of the goods. Similar controls already exist for other prohibited imports, including seized psychoactive substances and prohibited serious drug alternatives under subsection 206(2A) of the Customs Act.
Applying this same approach to seized tobacco products will significantly enhance the ability of Australian Border Force officials to effectively deal with imported illicit tobacco and would significantly reduce the operational burden of implementing the illicit tobacco reforms.
FINANCIAL IMPACT STATEMENT
The amendments have no financial impact.
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
A Statement of Compatibility with Human Rights has been completed in relation to the amendments in this Bill and assesses that the amendments are compatible with Australia's human rights obligations. A copy of the Statement of Compatibility with Human Rights is at Attachment A.
Attachment A - Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Customs Amendment (Immediate Destruction of Illicit Tobacco) Bill 2019
This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Bill
The Customs Amendment (Immediate Destruction of Illicit Tobacco) Bill 2019 (the Bill) amends section 206 of the Customs Act 1901 (the Customs Act) to allow the Comptroller-General of Customs to cause tobacco products seized as prohibited imports to be dealt in a manner he or she considers appropriate, including immediate destruction of the goods.
Background
The Australian Government announced in the 2018-19 Budget that it would tighten tobacco border controls by introducing a prohibited import control for tobacco products through the Black Economy Package - Combatting Illicit Tobacco.
From 1 July 2019, tobacco products will be prohibited imports under the Customs (Prohibited Imports) Regulations 1956. As such, tobacco products will only be able be imported into Australia with a valid import permit (except for international travellers using duty free allowances, specialty tobacco items such as cigars and smokeless tobacco and tobacco products as approved for importation into Australia by the Minister and listed in a legislative instrument). Tobacco products imported without a valid permit would be a prohibited import and would be able to be seized at the border without warrant.
The Customs Act currently requires seized prohibited imports to be stored for a minimum of 30 days before they can be disposed of. Legislative and administrative requirements for prohibited imports, including requirements to issue seizure notices and records of seizure, also need to be fulfilled. Managing tobacco as a prohibited import may result in a demonstrable increase of work at the border that will impact the Australian Government's ability to effectively regulate tobacco permit conditions and other border operations.
The Bill amends section 206 of the Customs Act to empower the Comptroller-General of Customs to cause tobacco products seized as prohibited imports to be dealt with in a manner he or she considers appropriate, including the immediate destruction of the goods. By permitting immediate destruction of illicit tobacco, the Bill will also allow for the issue of seizure notices combined with a destruction notice, reducing the administrative burden of the Black Economy Package.
Human rights implications
This Bill supports the Government's commitment to improve health outcomes for Australians and combat illicit tobacco. It is consistent with the Tobacco Strategy 2012-2018 (endorsed by all Australian Health Ministers) to reduce the affordability of tobacco products, and with the World Health Organization's Framework Convention on Tobacco Control which commits nations to implement policies to adopt measures for preventing and reducing tobacco consumption, nicotine addiction and exposure to tobacco smoke.
This Bill engages the right to enjoy the highest standard of physical and mental health.
Article 6(1) of the International Covenant on Civil and Political Rights (ICCPR) and Article 12 of the International Covenant on Economic, Social and Cultural Rights serve to protect a person's right to the highest standards or physical and mental health.
Trade in illicit tobacco is extremely profitable, particularly as a result of the ongoing excise increases (discussed above). Once illicit tobacco has entered the domestic supply chain, there are few disincentives for those who engage in the illicit tobacco trade due to the difficulties in proving that an offence has been committed under current laws.
Illicit tobacco undermines public health measures to reduce the prevalence and uptake of smoking, bypassing important controls and standards relating to manufacturing, plain packaging and health labelling. Illicit tobacco can be manufactured in sub-standard processes, uses potentially poisonous ingredients, and inherently poses environmental and contamination risks.
Australian Border Force activities have detected poisons such as formaldehyde, and found rat faeces inside illicit tobacco-posing a health and biosecurity risk to Australia.
Transnational serious and organised criminals are actively involved in the illicit tobacco market. We know that these groups consider illicit tobacco ventures to be low risk and high profit activities. They can tolerate routinely losing large amounts of product to law enforcement disruption activities and still make millions of dollars from a single importation.
The Black Economy Taskforce observed that tobacco is, by weight, more valuable than silver-and that smuggling illicit tobacco may yield greater profit than smuggling cocaine or heroin.
By smuggling tobacco into Australia and evading taxes, organised crime is able to channel its illicit profits into other criminal activities. Intelligence indicates these activities include illicit drugs, weapons, violence and intimidation-and in some cases may link to terrorism.
Due to the potential for the immediate destruction of illicit tobacco products seized as prohibited imports, this Bill engages and enhances the right to enjoy the highest standard of physical and mental health.
Further, the measure will improve physical and mental health outcomes, as the amount of illicit tobacco in Australia will be reduced, limiting public exposure to the potential harms associated with illicit tobacco, as well as improving the effectiveness of related health policies, such as tobacco plain packaging requirements
Accordingly, the introduction of a measure that allows for the immediate destruction of illicit tobacco products seized at the border, is reasonable, necessary and proportionate. It will further enhance the public's right to the highest standard of physical and mental health.
Conclusion
The Bill is compatible with applicable rights and freedoms recognised or declared in the international instruments listed in the definition of human rights in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011. To the extent that these measures may limit those rights and freedoms, such limitations are reasonable, necessary and proportionate to improve the effectiveness of illicit tobacco offences and to improve the health and safety standards in Australia.
NOTES ON CLAUSES
Clause 1 Short title
1. Clause 1 provides that this Act is the Customs Amendment (Immediate Destruction of Illicit Tobacco) Act 2019.
Clause 2 Commencement
2. Subclause 2(1) provides that each provision of this Act specified in Column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms.
3. Table item 1 provides that the whole of the Act commences on the day after the Act receives the Royal Assent.
Clause 3 Schedules
4. This clause is the formal enabling provision for the Schedules to the Bill, providing that each Act specified in a Schedule is amended or repealed as set out in the applicable items of the Schedule. This Bill amends the Customs Act.
5. This clause also provides that any other items of a Schedule to this Act have effect according to their terms. This is a standard enabling clause for transitional, savings and application items in amending legislation.
Schedule 1 - Amendments
Customs Act 1901
Outline
The Customs Amendment (Collecting Tobacco Duties at the Border) Act 2018 will introduce a new definition of "tobacco products" into subsection 4(1) of the Customs Act 1901 (the Customs Act) with effect from 1 July 2019. This definition will provide that: tobacco products means goods classified to heading 2401, 2402 or 2403 of Schedule 3 to the Customs Tariff Act 1995 (except goods classified to subheading 2402.90.00 or 2403.99.10 of that Schedule).
Section 206 of the Customs Act allows the Comptroller-General of Customs to cause certain seized goods to be dealt in a manner he or she considers appropriate, including immediate destruction of the goods. Amending subsection 206(2A) to include tobacco products will allow for the disposal of these goods consistent with the treatment of other seized goods. These amendments are necessary to ensure the continued efficiency of border operations following the prescription of tobacco products as prohibited imports under the Customs (Prohibited Imports) Regulations 1956 from 1 July 2019.
Item 1 Subsection 206(2A) (heading)
6. This item is consequential to item 2. The item would repeal the current heading to subsection 206(2A) "Prohibited psychoactive substances and prohibited serious drug alternatives" and replace this with the new heading "Prohibited psychoactive substances, tobacco products and prohibited serious drug alternatives".
Item 2 Paragraph 206(2A)(b)
7. This item would amend paragraph 206(2A)(b) to insert "tobacco products" after "prohibited psychoactive substance". The effect of this amendment would be to enable the Comptroller-General of Customs to cause seized tobacco products to be dealt in a manner he or she considers appropriate, including immediate destruction of the goods, provided that:
- (a)
- the goods were seized under a seizure warrant or under subsection 203B(2) or (2A), 203CA(3) or 203CB(2) on the reasonable suspicion that they were a tobacco product that is a prohibited import; and
- (b)
- the Comptroller-General of Customs is satisfied that the goods are a tobacco product.
If a person's goods are destroyed under these powers, he or she will have the right to recover the market value of the goods at the time they were destroyed, if certain circumstances set out in section 206 are satisfied.