House of Representatives

Explanatory Memorandum

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

Chapter 4 - Product stewardship oil indexation

Outline of chapter

4.1 This chapter explains amendments to the indexation provisions of the Excise Tariff Act 1921 that restrict the application of the provisions.

4.2 Item 8 of Schedule 1 alters section 6A of the Excise Tariff Act 1921 .

Context of amendments

4.3 The abolition of indexation of excise duty for all oils classified to item 15 of the Schedule to the Excise Tariff Act 1921 removes an inconsistency between the treatment of oil and fuels that arose when indexation was removed from all petroleum fuels as part of a package of cuts to petrol and diesel fuel excise on 2 March 2001. Alteration to the Excise Tariff Act 1921 will give effect to this decision.

Summary of new law

4.4 Section 6A of the Excise Tariff Act 1921 will be amended to remove certain oil products classified to item 15 of the Schedule to the Excise Tariff Act 1921 from the indexation provisions. [Schedule 1, item 8]

Detailed explanation of new law

4.5 Automatic indexation of rates of excise duty is provided for in section 6A of the Excise Tariff Act 1921 . It applies to all excisable alcohol, tobacco and oil products for non-fuel use that attract a duty rate other than free.

4.6 Section 6A of the Excise Tariff Act 1921 will be amended to exclude all oil products classified to item 15 of the Schedule to the Excise Tariff Act 1921 from the application of the provisions, for the indexation period commencing on 1 February 2003 and any subsequent indexation period.

Application and transitional provisions

4.7 These amendments will apply in respect of indexation that occurs on or after 1 February 2003.

Consequential amendments

4.8 Complementary amendments to the Customs Tariff Act 1995 for product stewardship oil indexation are being addressed through Customs Tariff Amendment Bill (No. 2) 2002.