SENATE

REPLACEMENT Explanatory Memorandum

(Circulated by the authority of the Treasurer the Hon John Dawkins, M.P.)

General Outline and Financial Impact

The following Bills will amend the Sales Tax Assessment Act 1992 and the Sales Tax (Exemptions and Classifications) Act 1992 to effect the changes detailed:

Sales Tax Assessment Amendment (Deficit Reduction) Bill 1993 ( (STAAM) );

Sales Tax (Excise) (Deficit Reduction) Bill 1993 ( (STEA) );

Sales Tax (General) (Deficit Reduction) Bill 1993 ( (STGA) );

Sales Tax (Customs) (Deficit Reduction) Bill 1993 ( (STCA) );

Sales Tax (In Situ Pools) (Deficit Reduction) Bill 1993 ( (STPA) ).

Sales Tax: General Rate Increases

•

Increases existing sales tax rates by one percentage point from 10% to 11%, 15% to 16%, 20% to 21% and 30% to 31%.

Date of effect: 18 August 1993

•

Increases sales tax rates by a further one percentage point from 11% to 12%, 16% to 17%, 21% to 22% and 31% to 32%.

Date of effect: 1 July 1995

Proposals announced: 1993-94 Budget, 17 August 1993.

Financial gain:

Sales Tax on Wine, Cider and other Similar Beverages

•

Increases the rate of sales tax on alcoholic wines from 20% to 31%. The rate of tax on those low alcohol wines that are taxable at 10% will increase to 21%.

Date of effect: 18 August 1993

Proposal announced: 1993-94 Budget, 17 August 1993.

Financial Gain:

Sales Tax on Luxury Motor Vehicles

•

Changes the effective rate of sales tax on luxury motor vehicles, so that:

(a)

that portion of the wholesale value that does not exceed the luxury threshold will be taxed at the rate of sales tax applicable to that kind of motor vehicle (ie. either 16% or 21%, depending on the classification of the vehicle); and

(b)

a new rate of 45% will apply to the excess.

Date of effect: 18 August 1993

Proposal announced: 1993-94 Budget, 17 August 1993.

Financial gain :

How do all the Bills affect the Current Sales Tax Law?

The following tables explain how the various Bills relate to the current Sales Tax legislation and what changes are designed to be achieved by the proposed new legislation.