Mr TRUSS (Minister for Customs and Consumer Affairs)(10.35 a.m.) —I move:

That the amendments be disagreed to.

The purpose of Excise Tariff Amendment Bill (No. 1) 1997 is to amend the Excise Tariff Act 1921 to ensure the continuing excisability of all beverages which contain distilled alcohol, including spirits, regardless of their alcohol content.

In November 1994, Carlton and United Breweries commenced the manufacture of the product known as sub zero alcoholic soda, which had an alcoholic content of approximately 5.5 per cent. The Australian Customs Service considered sub zero excisable under subitem 2H of the schedule to the tariff act as a spirituous beverage. CUB appealed the decision of the ACS to the Administrative Appeals Tribunal.

On 7 June 1996, the AAT determined that the production of sub zero with such a low alcohol content by volume could not be described as spirituous and therefore was not excisable under subitem 2H. The decision was based on what the AAT considered is commonly regarded as the definition of spirit in the community, which is a strong alcoholic liquor, usually containing not less than 37 per cent alcohol by volume. The matter is still subject to appeal to the full Federal Court.

The bill in its original form sought to amend the Excise Tariff Act 1921, in effect to maintain the status quo with the legislation. The Senate amendments seek to impose the beer rate of excise on any product in the National Food Authority standard P5. The effects of these amendments will be twofold on alcoholic beverages in the P5 category with an alcoholic content of less than five per cent.

The rate of excise on spirit based pre-mixed drinks in the P5 category will fall from $36.99 per litre of alcohol to $15.89 per litre of alcohol and, for the first time, excise will be imposed on other alcoholic products in the P5 category not currently subject to excise. It is apparently the intention of the Senate amendments to reduce the disparity in the taxation of alcoholic products by reducing the excise payable on highly taxed spirit based products and imposing, for the first time, excise on currently excise free beverages. The government remains of the view that the bill as originally introduced should not be amended.