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Thursday, 14 May 1987
Page: 3248


Mr BARRY JONES (Minister for Science)(5.17) —I move:

That the Bill be now read a second time.

This Bill will amend the Sales Tax Assessment Acts and the Sales Tax (Exemptions and classifications) Act to give effect to two decisions announced by the Treasurer (Mr Keating) as part of the Government's May economic statement. The Bill will withdraw an entitlement to exemption from sales tax of certain Commonwealth authorities specified in the Bill that carry on commercial functions, and deny exemption for Commonwealth authorities that may be established from today unless they belong to certain categories that continue to be exempt.

Commonwealth public transport authorities and Commonwealth authorities carrying out local government functions will continue to enjoy sales tax exemption, as do their State counterparts. Not all of the authorities specified in the Bill are entitled to sales tax exemption under the existing law. Some have been listed in the Bill to make their liability to sales tax a matter of record. The previously exempt authorities that now cease to be exempt from sales tax are: Australia Post, Telecom Australia, the Army and Air Force Canteen Service, the Australian Capital Territory Gaming and Liquor Authority, the Superannuation Fund Investment Trust and the Housing Loans Insurance Corporation. Any Commonwealth authorities that are established from now on will not be entitled to a general sales tax exemption for government authorities. Exemption will apply only where expressly conferred by legislation or where an authority qualifies for exemption under another provision. The Bill will also implement the Government's decision to vary the special sales tax concessions available to passengers arriving from overseas. Changes are being made today to the customs tariffs bylaws, to make corresponding changes to the customs duty passenger concessions.

The broad effect of the amendments to be made by this Bill, and the amendments to the customs tariff bylaws I have just mentioned, will be to allow passengers arriving in Australia a sales tax exemption and duty free entry for goods having a value of $400, in the case of passengers aged 18 years or over, and $200 for those under 18. Where the value of the goods exceeds those limits, the proportion of the value within the limits will be free from duty and tax. Duty and tax will not be payable on clothing, other than furs, that is for the personal use of passengers. The existing free limits on tobacco and alcohol will remain but the special concession for migrants' motor vehicles-which are currently free of both sales tax and customs duty-will be removed. The revised passenger concession arrangements are to be effective from 1 July 1987. Removal of the exemption for migrants' motor vehicles applies from 14 May 1987, except where vehicles were purchased or firm contracts to purchase were entered into before that date.

It is estimated that the amendments to place the specified Commonwealth authorities on the same sales tax footing as private sector commercial authorities will result in a gain to revenue of $310m in 1987-88 and $395m in 1988-89. Special arrangements will apply in 1987-88 to the removal of the sales tax exemption from Telecom Australia. Where Telecom's total payment of sales tax and customs duty in 1987-88 exceeds $360m, the amount of the excess will be refunded to Telecom subject to a refund ceiling of $100m. The new passenger concessions arrangements, including the sales tax measures facilitated by the Bill, will result in a net saving of $20m in 1987-88 and $21m in 1988-89. I commend the Bill to honourable members. In doing so, I present the explanatory memorandum on this Bill.

Debate (on motion by Mr Downer) adjourned.