The Commonwealth Treasury


TAX EXPENDITURES STATEMENT 2004

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Chapter 6: Tax expenditures
(continued)

1.3 Commodity tax benchmark

Commodity taxes

Fuel

F1 Higher rate of excise levied on leaded petrol

Health ($m)
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
-25 .. .. .. .. .. .. ..
Tax expenditure type:
Increased rate
2003 TES code:
F2
Commencement date:
1994
Expiry date:
2001
Legislative reference:
Item 11 of Schedule of the Excise Tariff Act 1921

Leaded petrol is subject to a higher rate of excise than the benchmark rate, which is the rate that applies to unleaded petrol and ultra low sulphur diesel. The excise differential, which currently equates to around two cents per litre was originally introduced in 1994 to address health concerns associated with the use of leaded fuels.

The decline in this tax expenditure in 2001-02 reflects the introduction of lead replacement petrol, which is subject to excise at the high energy content fuel rate, and restricted access to leaded petrol (under the Fuel Quality Standards Act 2000) from 1January 2002.

 

F2 Higher rate of excise levied on high sulphur diesel

Health ($m)
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
- - - -165 -150 -45 - -
Tax expenditure type:
Increased rate
2003 TES code:
F3
Commencement date:
2003
Expiry date:
 
Legislative reference:
Item 11 of Schedule of the Excise Tariff Act 1921

Diesel with a sulphur content higher than 50 parts per million is subject to a higher rate of excise than the benchmark rate, which is the rate that applies to unleaded petrol and ultra low sulphur diesel. The excise differential of one cent per litre was implemented from 1 July 2003 and was increased to two cents per litre from 1January2004. This tax expenditure was announced as part of the Measures for a Better Environment package and is designed as an incentive for the production of ultra low sulphur diesel.

From January 2006, diesel with more than 50 parts per million of sulphur will no longer meet fuel standards, and will no longer be able to be sold.

 

F3 Excise levied on fuel oil, heating oil and kerosene

Fuel and energy ($m)
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
-60 -60 -65 -85 -90 -90 - -
Tax expenditure type:
Increased rate
2003 TES code:
F4
Commencement date:
Introduced before 1985
Expiry date:
 
Legislative reference:
Item 11 of Schedule of the Excise Tariff Act 1921

The benchmark excise for fuels consumed for a purpose other than in an internal combustion engine is zero. Fuel oil, heating oil and kerosene that are used as a fuel but not used as a fuel in internal combustion engines are currently subject to an excise of 7.557 cents per litre. Excise on these products will be effectively removed from 1July2006.

 

F4 Increased tax rates on petrol and diesel

Fuel and energy ($m)
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
- - - - - -6 -65 -115
Tax expenditure type:
Increased rate
2003 TES code:
F7
Commencement date:
2006
Expiry date:
2009
Legislative reference:
Not yet legislated

Excise rates will be increased for all petrol from 1 January 2006 for two years and for all diesel from 1 January 2007 for two years. These increases will be used to fund grant payments for the production or import of petrol with less than 50 parts per million sulphur and diesel with less than 10 parts per million sulphur.

 

F5 Concessional rate of excise levied on aviation gasoline and aviation turbine fuel

Fuel and energy ($m)
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
870 770 740 745 745 745 745 745
Tax expenditure type:
Concessional rate
2003 TES code:
F5
Commencement date:
Introduced before 1985
Expiry date:
 
Legislative reference:
Item 11 of Schedule of the Excise Tariff Act 1921

Aviation gasoline and aviation turbine fuel are subject to a lower rate of excise than the benchmark rate. Aviation turbine fuel is currently excised at 3.151 cents per litre and aviation gasoline is currently excised at 3.114 cents per litre. Excise on aviation fuels, at various times since 1957, have been used to fund the provision of air services by the Australian Government. Excise on aviation fuel is currently directed to the funding of the Civil Aviation Safety Authority and the Airservices Australia Location Specific Pricing Subsidy.

 

F6 Exemption from excise for 'alternative fuels'

Fuel and energy ($m)
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
630 680 700 760 800 860 900 920
Tax expenditure type:
Exemption
2003 TES code:
F6
Commencement date:
1985
Expiry date:
 
Legislative reference:
Excise Tariff Act 1921

Alternative transport fuels (that is, alternative fuels that are used in internal combustion engines), including liquefied petroleum gas and compressed natural gas, are currently exempt from excise duty. Starting from 1 July 2011, excise on these fuels will be introduced in five equal annual steps to a final rate on 1 July 2015. A discount of 50 per cent to the energy content excise rate will apply to these fuels.

 

Tobacco

F7 Higher rate of excise levied on cigarettes with less than 0.8 grams of tobacco

Health ($m)
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
-1,290 -1,320 -1,420 -1,380 -1,380 -1,390 -1,390 -1,390
Tax expenditure type:
Increased rate
2003 TES code:
F1
Commencement date:
1999
Expiry date:
 
Legislative reference:
Item 8 of Schedule of the Excise Tariff Act 1921

The benchmark excise treatment for the consumption of tobacco products is applied per kilogram of tobacco. This treatment applies to loose tobacco and to cigarettes and cigars with more than 0.8 grams of tobacco. However, cigarettes and cigars with less than 0.8 grams of tobacco are subject to excise on a per-stick basis. The effect of per-stick excise is to tax the tobacco in these cigarettes and cigars more heavily than the benchmark. This tax expenditure is designed to discourage smoking more, lighter cigarettes that have created greater health problems than smoking the same amount of tobacco in fewer cigarettes.

 

F8 Concessional excise for snuff

Not allocated to function ($m)
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
.. .. .. .. .. .. .. ..
Tax expenditure type:
Concessional rate
2003 TES code:
New
Commencement date:
Introduced before 1985
Expiry date:
 
Legislative reference:
Excise Tariff Act 1921

Snuff is excised at a rate of $2.27 per kilogram, while other tobacco products are excised at $279.41 per kilogram (and at a higher rate for cigarettes containing less than 0.8 grams of tobacco per stick).

 

Alcohol

F9 Concessional rate of excise on low-strength packaged beer

Not allocated to function ($m)
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
-60 -45 15 15 15 15 15 15
Tax expenditure type:
Concessional rate
2003 TES code:
F14
Commencement date:
Introduced before 1985
Expiry date:
 
Legislative reference:
Item 1 of the Schedule to the Excise Tariff Act 1921

Low-strength beer that is packaged in containers not exceeding 48 litres and which has an alcohol content of no more than 3 per cent is taxed at a concessional excise rate relative to higher strength beer. The first 1.15 per cent of alcohol remains free of excise.

From July 2002, earlier State subsidies for low-alcohol beer, and concessions for mid-strength beer, were withdrawn and replaced by a uniform Australian Government excise concession. This accounts for the change in the size of the tax expenditure.

 

F10 No excise-free threshold for excisable alcoholic beverages (other than beer) not exceeding 10 per cent alcohol

Not allocated to function ($m)
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
-50 -75 -85 -110 -115 -130 -145 -165
Tax expenditure type:
Increased rate
2003 TES code:
F9
Commencement date:
2000
Expiry date:
 
Legislative reference:
Item 1 of Schedule of the Excise Tariff Act 1921

Alcoholic beverages not exceeding 10 per cent alcohol include beer and ‘ready-to-drink’ beverages. The benchmark treatment for these beverages includes an excise-free threshold: the first 1.15 per cent of alcohol is not excisable. However, alcoholic beverages not exceeding 10 per cent alcohol other than beer do not qualify for the excise-free threshold that is currently available for beer.

 

F11 Concessional rate of excise levied on draught beer

Not allocated to function ($m)
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
30 140 150 160 170 170 170 180
Tax expenditure type:
Concessional rate
2003 TES code:
F11
Commencement date:
2001
Expiry date:
 
Legislative reference:
Item 1 of Schedule of the Excise Tariff Act 1921

Draught beer (that is, beer packaged in individual containers exceeding 48 litres) is subject to a lower rate of excise than beer packaged in individual containers not exceeding 48 litres. This tax expenditure was designed to limit price increases for draught beer associated with the introduction of The New Tax System.

 

F12 Concessional rate of excise levied on brew on premise beer

Not allocated to function ($m)
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
.. .. .. .. .. .. .. 1
Tax expenditure type:
Concessional rate
2003 TES code:
F12
Commencement date:
1993
Expiry date:
 
Legislative reference:
Item 1 of Schedule of the Excise Tariff Act 1921

Brew on premise beer (that is, beer produced for non-commercial purposes using commercial facilities or equipment) is subject to a lower rate of excise than other beer. This tax expenditure ensures that own-use brewers hiring commercial facilities may still gain access to concessional excise arrangements.

 

F13 Excise concession for microbreweries

Not allocated to function ($m)
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
.. .. .. .. .. .. .. 1
Tax expenditure type:
Concessional rate
2003 TES code:
F13
Commencement date:
2000
Expiry date:
 
Legislative reference:
Regulation 50(1)(zzd) of the Excise Act 1901

Microbreweries producing less than 30,000 litres of product per annum receive excise concessions in the form of a refund of excise paid. The refund paid in any financial year cannot exceed the lesser of $10,000 or 60 per cent of the excise payable.

 

F14 Consumption tax exemptions for privately produced beer

Not allocated to function ($m)
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
25 25 30 30 35 35 40 45
Tax expenditure type:
Exemption
2003 TES code:
New
Commencement date:
Introduced before 1985
Expiry date:
 
Legislative reference:
Schedule to the Excise Tariff Act 1921

Beer made for personal use by private individuals is exempted from the payment of excise.

 

F15 Rebate of wine equalisation tax for cellar door and mail order wine sales

Not allocated to function ($m)
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
15 14 16 16 4 - - -
Tax expenditure type:
Offset
2003 TES code:
F10
Commencement date:
2000
Expiry date:
October 2004
Legislative reference:
Schedule 9A of the Indirect Tax Legislation Amendment Act 2000

A partial rebate of wine equalisation tax was available for certain cellar door, mail order and internet sales of wine. The maximum rebate of 14 per cent of the taxable value was available for all eligible sales of wine up to $300,000 per annum (wholesale value). The rebate tapered to zero for sales between $300,000 and $580,000.

The rebate complemented similar state production subsidies of 15 per cent, to support cellar door and mail order sales by smaller winemakers.

The rebate was replaced, from 1 October 2004, by the new Wine Equalisation Tax (WET) Producer Rebate.

 

F16 Wine Equalisation Tax (WET) Producer Rebate

Agriculture, forestry and fishing ($m)
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
- - - - 70 105 110 120
Tax expenditure type:
Rebate
2003 TES code:
New
Commencement date:
October 2004
Expiry date:
 
Legislative reference:
Tax Laws Amendment (Wine Producer Rebate and Other Measures) Act 2004

The WET Producer Rebate replaces the earlier WET Cellar Door Rebate scheme. From 1 October 2004, producers receive a rebate of the first $290,000 of WET paid by each producer per annum. The rebate also extends to cider, perry and sake.

The rebate is designed to assist the wine industry, particularly small producers in regional Australia.

 

F17 Consumption tax exemptions for privately produced wine

Not allocated to function ($m)
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
* * * * * * * *
Tax expenditure type:
Exemption
2003 TES code:
New
Commencement date:
Introduced before 1985
Expiry date:
 
Legislative reference:
A New Tax System (Wine Equalisation Tax) Act 1999

Wine made for personal use by private individuals is exempted from the Wine Equalisation Tax.

 

F18 Concessional rate of excise levied on brandy

Agriculture, forestry and fishing ($m)
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
5 5 5 5 5 5 5 5
Tax expenditure type:
Concessional rate
2003 TES code:
F8
Commencement date:
Introduced before 1985
Expiry date:
 
Legislative reference:
Item 2A of the Excise Tariff Act 1921

Brandy is subject to a lower rate of excise than other spirits ($56.21 per litre of pure alcohol, compared to $60.20 at 2 August 2004). This treatment was established as a support measure for the grape production industry. The excise rates on other spirits and on brandy are indexed to the consumer price index biannually. Consequently, the excise differential increases over time.

 

Motor vehicles

F19 Luxury car tax

Other economic affairs (C) ($m)
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
-170 -220 -260 -335 -330 -345 -365 -385
Tax expenditure type:
Increased rate
2003 TES code:
F15
Commencement date:
2000
Expiry date:
 
Legislative reference:
A New Tax System (Luxury Car Tax) Act 2000

Motor vehicle purchases are not taxed under the benchmark, therefore the luxury car tax is a negative tax expenditure. Luxury car tax applies to the value of car sales and importations that exceed the luxury car tax threshold. The tax does not apply to specified emergency vehicles.

 

General consumption tax expenditures

F20 Certain exemptions for diplomatic missions and foreign diplomats

Not allocated to function ($m)
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
6 7 7 7 7 7 6 6
Tax expenditure type:
Concessional rate
2003 TES code:
F16
Commencement date:
Introduced before 1985
Expiry date:
 
Legislative reference:
Regulation 50 of the Excise Act 1901Section 10 of the Diplomatic Privileges and Immunities Act 1967Section 10 of the Consular Privileges and Immunities Act 1972Section 11 of the International Organisations (Privileges and Immunities) Act 1963Section 12 of the Overseas Missions (Privileges and Immunities) Act 1995

Note: estimates represent excise duty only.


Excise, Wine Equalisation Tax and luxury car tax is not payable (or an equivalent amount of that paid is claimable) for alcohol, fuel, tobacco and luxury cars used for official purposes by diplomatic missions or for personal use by persons identified in the Diplomatic Privileges and Immunities Act 1967.

 

F21 Certain exemptions for Australian military sea vessels

Not allocated to function ($m)
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
2 2 2 2 2 2 2 2
Tax expenditure type:
Concessional rate
2003 TES code:
F17
Commencement date:
Introduced before 1985
Expiry date:
 
Legislative reference:
Item 18 of the Schedule to the Excise Tariff Act 1921

Note: estimates represent excise duty only.


Excises on tobacco and certain alcoholic products are not payable by Australian military seagoing vessels in full commission when the products are consumed on board.

 

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Commonwealth of Australia 2005
ISBN 0 642 74280 4