Commonwealth Numbered Regulations - Explanatory Statements

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TOBACCO CHARGE (NO 1) (RATE OF CHARGE) REGULATIONS (AMENDMENT) 1995 NO. 43

STATUTORY RULES 1995 No. 43

Issued by the Authority of the Assistant Treasurer

Tobacco Charge Act (No. 1) 1955

Tobacco Charge (No 1) (Rate of Charge) Regulations (Amendment)

Section 6 of the Tobacco Charge Act (No. 1) 1955 (the Act) provides that the Governor-General may make regulations which prescribe the rate of tobacco charge, provided that the rate does not exceed 6 cents. The Governor-General is also required to take into consideration the recommendations of the Australian Tobacco Marketing Advisory Council (ATMAC). ATMAC was formerly the Australian Tobacco Board.

The Act is one of the three Tobacco Charge Acts (No. 1-3) 1955, which impose tobacco charge on certain transactions with tobacco leaf grown in Australia. Broadly speaking, the transactions on which the charge is imposed are sale or purchase by a manufacturer, and use in manufacturing by a grower, provided that the tobacco has not already been subject to the charge. The regulations set the rate of tax for each of the Tobacco Charge Acts (Nos. 1 - 3).

These regulations will reduce the rate of tobacco charge from 4.2 cents to 3.2 cents per kilogram of tobacco leaf, with effect from 28 February 1995.

Tobacco charge is the sum of the amounts imposed under paragraphs 5(a) and 5(b) of the Act An amount equivalent to the revenue collected under paragraph 5(a) goes to finance ATMAC's operations. The amount equivalent to the revenue collected under paragraph 5(b) finances the operations of the Tobacco Research and Development Council.

On 22 November 1994, ATMAC wrote to the Treasurer, recommending that the rate of tobacco charge be reduced from 4.2 cents to 3.2 cents per kilogram of tobacco leaf. However, depending on circumstances, ATMAC recommended different methods of apportioning the charge between paragraphs 5(a) and 5(b).

In the event that the government had announced that ATMAC was to be wound up, it was recommended that rate under paragraph 5(a) should be reduced from 1.5 cents per kilogram of tobacco leaf to zero, and the rate under paragraph 5(b) should be increased from 2.7 cents to 3.2 cents. If the government had not announced that ATMAC was to be wound up, then it was recommended that the rate under paragraph 5(a) be reduced from 1.5 cents to 0.5 cents, and the rate under paragraph 5(b) should be unchanged.

Since the government had announced on 13 December 1994 that ATMAC was to be wound up, these regulations put the first method of apportionment in place. The rate for the purposes of paragraph 5(a) of the Act will therefore be zero, and the rate of the purposes of paragraph 5(b) will be 3.2 cents. The regulations will set the rate of tobacco charge for each of the Tobacco Charges Acts (Nos. 1 - 5).

The regulations will commence on 28 February 1995.

Details of the proposed amendments to the Regulations are as follows:

Regulation 1 - provides that these regulations will commence on 28 February 1995.

Regulation 2 - provides for the amendment of the Regulations.

Regulation 3 - amends subregulations 4(1) and 4(2) of Tobacco Charge (No. 1) (Rate of Charge) Regulations, the subregulations which actually prescribe the rate of tobacco charge. Subregulation 3(1) prescribes the amount of 0 cents for the purposes of paragraph 5(a) and subregulation 3(2) prescribes the amount of 3.2 cents for the purposes of paragraph 5(b).