House of Representatives

Explanatory Memorandum

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

Chapter 3 - Amendment of the Excise Tariff Act 1921

Outline of Chapter

3.1 This Chapter explains technical amendments to the Excise Tariff Act 1921 that replace specific references to excise tariff items with generic descriptions.

Background to the legislation

3.2 In January 1998 the legislation commenced to deter and detect fuel substitution activities. The Government then foreshadowed a review of the arrangements relating to fuel substitution activities in the policy document entitled Tax Reform: not a new tax: a new tax system .

3.3 Special provisions in the Excise Tariff Act 1921 allow changes to the excise tariff to be made by gazetting a proposal or tabling a proposal in Parliament.

3.4 The Excise Tariff Act 1921 currently contains references to specific tariff items. These references restrict the Government's ability to quickly amend the tariff by gazettal or proposal to address fuel substitution activities.

Summary of new law

3.5 Specific tariff items are removed and replaced with generic descriptions.

Explanation of amendments

3.6 Schedule 3 to this Bill removes specific references from 2 sections of the Excise Tariff Act 1921 and replaces them with generic descriptions.

3.7 These changes do not affect the way excise is levied or the level of excise duty payable on petroleum products.

3.8 Schedule 3 to this Bill also inserts a new definition in the Excise Tariff Act 1921 , 'maximum diesel rate'. This definition is a consequential amendment inserted to simplify the reading of section 6G of the Excise Tariff Act 1921 which relates to the manner of determining duty payable on excisable blended petroleum following the move to generic descriptions. It does not affect the way the blending rate is calculated.