Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard   

Previous Fragment    Next Fragment
Tuesday, 23 August 1983
Page: 61


Mr HURFORD (Minister for Housing and Construction and Minister Assisting the Treasurer)(9.46) —I move:

That the Bill be now read a second time.

This Budget measure will alter the sales tax classification of certain goods, principally to correct a number of anomalies and inconsistencies. The Sales Tax (Exemptions and Classifications) Act which this Bill amends not only classifies particular goods as exempt from sales tax, but also places other goods in one or other of the tax rate categories. Goods not covered by the Act are taxable at 20 per cent. In all, there are 26 changes. Before the election, we undertook to review the rate structure and classification of goods under the sales tax law and this Bill is a step in that direction. In making the changes we have given attention to representations that have been made to the Government by honourable members and other interested people. Some alterations are designed to remove competitive anomalies; that is, those which give some products a competitive advantage over other products. Other changes are designed to achieve uniformity in classification of various types of goods or to remove weaknesses or correct deficiencies which are proving costly to the revenue. Others are designed to refine aspects of measures in the 1981-82 Budget which have thrown up administrative difficulties for taxpayers or have not fully achieved their desired purpose. In doing all this we have necessarily had to keep an eye on revenue consequences. Accordingly, a number of the amendments will bring into the taxable field goods which are exempt, while others will move goods into a higher tax bracket. However, it is not in any sense a one-way street, and in some instances anomalies and inconsistencies are being removed by exempting goods that are at present taxable or by moving goods into a lower tax category.

Speaking in more detail, several important changes have been made to the exemptions available to the agricultural industry. Our basic aim is not to curtail the industry's sales tax exemptions, but specifically to confine these exemptions to goods that are for use in that industry. At present, certain specified units of agricultural machinery, implements and apparatus are exempt from sales tax whether or not the goods are for use in the agricultural industry . This was not the intention underlying the particular item and we propose to correct the situation by restricting the exemption for the particular goods so that it applies only when the goods are for use in the agricultural industry. I emphasise again that restricting the exemption item in this way does not mean that there is to be any narrowing of the exemptions available on agricultural machinery, implements and apparatus for use by persons in the agricultural industry. In consequence of the changes that are being made, agricultural machinery, implements and apparatus not for use in the agricultural industry will now attract tax at the 20 per cent rate, but goods which are hand tools to which the 7.5 per cent rate generally applies will attract only that rate.

A further alteration will affect equipment, preparations and materials for the checking or eradication of disease or pests. The intention underlying the particular item is to exempt spraying equipment and materials used in the agricultural industry in controlling insect pests and other diseases. Due to deficiencies in the law, certain insecticides used, for instance, in and around the home to control insect pests, have gained exemption. Other domestic insecticides are taxable at 20 per cent. We proposed to correct this situation by restricting exemption under the item to relevant equipment and materials only when for use in the agricultural industry. As a result, insecticides, fungicides and herbicides used for domestic purposes will now attract tax at 20 per cent. Once again, I stress that there is to be no narrowing of the exemption available for equipment, preparations and materials for use in the agricultural industry for the checking or eradication of disease or pests.

Before leaving the agricultural area, I mention a change that involves the exemption for tractors. In order to overcome problems that have arisen in recent years with this exemption, it is now to be varied. Exemption will continue for tractors for use in the agricultural industry, tractors for use in the timber- getting industry in the hauling of log timber and tractors for use as aids to manufacture. However, exemption will no longer apply to tractors used in other circumstances unless overriding exemption provisions of the law, such as those which exempt goods for use by government departments, apply. Tractors for use in building and construction industries, including construction of roads, dams and other works will qualify for the rate of 7.5 per cent that applies generally to construction equipment. A major effect of the decision to withdraw the general exemption for tractors will be to tax at 20 per cent certain models of ride-on mowers for lawn and grass mowing. Although designed for use principally as mowers, these goods have the general appearance and features of a small conventional tractor. They have been marketed for use as general purpose tractors in order to gain sales tax exemption, but will now attract tax at 20 per cent in line with other mowers.

I move now to some of the other changes to sales tax classifications that will result in increases in revenue. The first of these relates to the exemption from sales tax available for piping, tubing, channelling and guttering. The intention underlying the particular item was to exempt these goods only when they are for use for irrigation, water supply, drainage or sewerage purposes. Due to deficiencies in the law, however, the item does not limit exemption in this way and we propose now to restrict exemption to equipment for use for those purposes . It is proposed to tax at the 20 per cent rate liners and component parts for swimming pools and to tax goods designed to form part of swimming pools, incuding swiming pool filters installed as fixtures, at 20 per cent. An anomaly exists at present as a result of which the smaller above-ground pools are taxable at 20 per cent, as are the component parts for them and portable filters , but other pools are exempt. We propose to remove this anomaly by making liners , component parts and filters installed as fixtures in respect of all swimming pools subject to tax at 20 per cent.

I referred earlier to proposals designed to refine further the measures taken to correct certain anomalies in the 1981-82 Budget which have given rise to administrative difficulties for taxpayers or have not fully achieved their desired purpose. With this in mind, we propose to tax all oils, greases and lubricants at 20 per cent. The particular item was amended in the 1981-82 Budget to exclude from exemption oils and greases for use as lubricants of road vehicles. Exemption continued for some oils and greases but was conditional on their being for use for business or industrial purposes as lubricants of machinery, implements and apparatus other than road vehicles.

Oil companies and distributors have complained about the additional paperwork in obtaining certificates from people in business who seek exemption. Likewise, purchasers have complained about the need to do this. In some instances purchasers have complained that some distributors are not prepared to allow exemption. Other problems arise where lubricants are purchased by persons or businesses which operate both road vehicles and other machinery for business purposes, as in the agricultural, mining and construction industries. The administration of the exemption is difficult for all parties where a particular lubricant is for use both in road vehicles and in other equipment in exempt circumstances. Accordingly, all oils, greases and lubricants will now attract tax at 20 per cent. As announced earlier tonight, the levy on matches is to be switched from an excise to sales tax. The Bill includes the necessary sales tax measures.

Mr Deputy Speaker, I have commented on the more important alterations to sales tax classifications that will result in increases in revenue. There are others, such as the proposal to increase the rate of tax on blank video tapes and blank recording tapes and on most recorded video tapes to 32.5 per cent, but I think that I need not go into all of them in this introductory speech. They are fully explained in the explanatory memorandum that is being circulated to honourable members and I think that what I have said sufficiently illustrates the kinds of adjustments of this nature that are to be effected by the Bill. Still other alterations will result in the withdrawal of minor exemptions and the restriction of certain exemptions to restore them to their originally intended scope.

I indicated earlier that a number of measures in the Bill will reduce sales tax revenue, and they are also covered in the explanatory memorandum and have been listed in Budget Papers. There are three particular reductions in sales tax that I would like to make some comment about at this stage. The first of them was announced recently by the Prime Minister (Mr Hawke) and involves exemption from sales tax of certain tourist vessels. In the 1981-82 Budget, certain ships and other vessels for use exclusively or principally for purposes of pleasure, sport or recreation by the owner or by other persons, whether or not for reward, became taxable at 20 per cent. Prior to 1981, vessels let out on hire on a 'bare boat' basis for pleasure, sport or recreational purposes were taxed at 20 per cent, the hirers being regarded as using the vessel for such purposes. However, pleasure craft that took paying passengers on pleasure, sport or recreational outings and vessels hired out with a crew were exempt from sales tax. Vessels used as ferries for scheduled public passenger and freight transport services were exempt prior to the 1981-82 Budget and have remained exempt.

Since the 1981 amendment, it has been represented that tourist vessels should not be taxable in a situation where buses, trains and planes used to transport tourists are exempt. The boat building industry has also complained of a significant reduction in orders. The Government has recognised the problems in this area and we propose to exempt from sales tax certain types of tourist vessels which are used essentially for transporting paying passengers on regular and scheduled tours. Accordingly, the types of tourist vessels to be exempted are those vessels which are licensed to carry at least 12 adult passengers, are to be used by their owner principally in the course of a business carried on by the owner and are to be used principally for the purpose of transporting paying passengers on regular and scheduled sight seeing tours. The exemption will extend to vessels which are not owned but which are held under a long term lease or under a hire purchase agreement and are used in the requisite circumstances.

Exemption is not to extend to vessels to be used to take tourists on unscheduled scuba diving expeditions, game fishing outings or other general recreational trips. Nor is exemption to extend to vessels that are to be chartered or otherwise hired out, whether for purposes of pleasure, sport or recreation or for other purposes such as business promotions, functions and conferences where the transport of paying passengers is not involved and no regular, scheduled tour occurs. The Government has decided to backdate the exemption to 19 August 1981 so as not to disadvantage those who have purchased the particular vessels since that date.

The Government has also decided to exempt Videotex equipment, Teletext decoding equipment and similar equipment for use by the profoundly deaf in adapting a television receiver. Videotex equipment enables the spoken word and information to be reproduced in visual form on screens of television receivers or monitors designed for use with such equipment, without the need for sound. The benefit of such equipment to the deaf is obvious and I am sure members of the community will welcome the Government's decision in this regard.

The Government also proposes to reduce the rate of tax on a range of household goods. Household goods in general, including glassware, crockery, sewing and knitting machines and furniture are already taxable at 7.5 per cent. However, because of alternative taxing provisions or the manner in which the particular provision relating to household goods has been framed, certain goods which are clearly household goods have not attracted the 7.5 per cent rate.

With this in mind, the Government has decided to reduce the rate of tax on cut glassware from 20 per cent to 7.5 per cent, the same rate as for other household glassware; to reduce the rate of tax on articles of a material other than glass, but used for similar purposes to glassware, from 20 per cent to 7.5 per cent, the same rate as for household glassware and crockery; to reduce the rate of tax on household spinning wheels and weaving looms from 20 per cent to 7.5 per cent, the same rate as for household sewing and knitting machines; and to reduce the rate of tax on jardinieres and vases from 32.5 per cent to 7.5 per cent. The net result of all the changes will be an increase in revenue estimated at $44m in a full year and $29m in 1983-84. I mention that these figures would have been $58m and $45m respectively if we had not provided the reductions in sales tax that we have. It is customary for sales tax changes to come into operation on the day following the introduction of the amending Bill and the Bill therefore provides that the amendments are to be effective on and after tomorrow, 24 August 1983. There is the exception that the amendment to exempt certain tourist vessels, which the Minister for Sport, Recreation and Tourism (Mr John Brown) is so pleased about, will be backdated to 9 August 1981 and some changes arising out of the closer economic relations agreement with New Zealand will have effect after the amending Bill becomes law. I commend the Bill to the House.

Debate (on motion by Mr Shipton) adjourned.