House of Representatives

Explanatory Memorandum

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

Chapter 2 - Product stewardship oil levy exemptions

Outline of chapter

2.1 This chapter explains amendments to the Excise Tariff Act 1921 that will exclude certain oil products from the product stewardship oil (PSO) levy.

2.2 Items 4 to 6 of Schedule 1 alter the Excise Tariff Act 1921 by adding definitions of goods which are exempt from the PSO levy to section 3, and altering the description of item 15 in the Schedule. [Schedule 1, items 4 to 6]

Context of amendments

2.3 The intention of the Product Stewardship Arrangements is to reduce the impacts of waste oil through an excise style levy imposed on virgin oils and lubricants. Where oils are used in the manufacture of another product, are not contributing to the waste oil problem and are clearly distinguishable from oils that do, these oils should be excluded, where feasible, from the levy. The Government has decided to exempt certain oil products meeting these criteria from the PSO levy. Alterations to the Excise Tariff Act 1921 will give effect to this decision.

Summary of new law

2.4 Section 3 of the Excise Tariff Act 1921 and item 15 of the Schedule will be amended to exclude certain oil products, by definition, from the PSO levy and alter the description of item 15 in the Schedule. [Schedule 1, items 4 to 6]

Detailed explanation of new law

2.5 Section 3 of the Excise Tariff Act 1921 will be amended to exclude certain products from the PSO levy by adding definitions in subsection 3(1) and new subsection 3(6) for the following products that meet specified criteria:

•

certain food grade white mineral oils;

•

certain polyglycol brake fluids; and

•

certain aromatic process oils.

[Schedule 1, items 4 and 5]

2.6 The description of item 15 of the Schedule to the Excise Tariff Act 1921 will be amended to exclude the newly defined products for this tariff item classification. [Schedule 1, item 6]

Application and transitional provisions

2.7 These amendments are taken to have effect on and from 15 April 2002.

Consequential amendments

2.8 Complementary amendments to the Customs Tariff Act 1995 for PSO exemptions are being addressed through Customs Tariff Amendment Bill (No. 2) 2002.