Page 167 - Week 01 - Wednesday, 17 February 1993
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This problem was partially overcome through the introduction of the Liquor Tax Act which came into effect on 1 January 1992 and which involves the operation of two licensing schemes - one for old licensees, that is, persons already licensed at 1 January 1992; and one for new licensees, that is, persons licensed on or after 1 January 1992. Persons licensed on or after 1 January 1992 are required to pay tax in advance of each quarter's trading based on estimated or past sales. This advance payment is then adjusted when actual details are known, with the adjustment added to the next tax payment.
Old licensees, however, are required to pay tax calculated on purchases made during the quarterly period commencing 15 months prior to the licence period. It was impossible to bring those old licensees into an advance scheme without imposing a heavy financial burden on them. However, the Act provides that, in the case of a licensee ceasing to trade or a licence being transferred, fees payable in respect of those 15 months of trading be crystallised into a debt payable by the former licensee in the case where a licence ceases to be in force and by the transferee where a licence is transferred.
The existence of these two categories of licensees poses a problem for the introduction of different rates for taxing low and high alcoholic beverages, which I have announced earlier. The current rate of tax is 10 per cent of the value of liquor purchased. This will be replaced by two rates from 1 April 1993 - 13 per cent on high and 7 per cent on low alcohol beverages. Under the operation of the current arrangements for new licensees, if they wish to recoup the increase in licence fees payable in advance, they will be required to increase their prices immediately from 1 April 1993. Because their March payment is based on sales 15 months earlier, old licensees would not become liable to pay the increased fees for 15 months and therefore would receive a significant commercial advantage over the new licensees. It therefore became clear to the Government that consideration must now be given to the adoption of a single integrated scheme which will apply equally to all licensees. The Business Franchise (Liquor) Bill 1993 introduces such a uniform scheme.
The opportunity has also been taken to review the licensing regime in the light of the High Court decision in the X video case and to develop legislation which meets the requirements of the Territory in relation to the operation of section 90 of the Constitution. The Bill has basically adopted the scheme currently in place for new licensees, requiring all licensees to pay fees in advance for the right to trade during the coming quarter. There is, however, one significant difference. As previously indicated, under the current Liquor Tax Act, new licensees are required continually to adjust estimated purchases with actuals and to adjust the new quarterly fee accordingly. Under the franchise scheme adopted in the proposed Bill there will in fact be no adjustments. The licence fee for a continuing licensee will be based only on purchases by that licensee in the last completed quarter.
New licensees will be required to pay an initial fee for up to the first two quarters as assessed by the Commissioner for ACT Revenue, having regard to criteria specified in the legislation. Licensees will be able to appeal to the Administrative Appeals Tribunal if they have objections to the fee assessed by the commissioner. As with the amendments to the X videos legislation which I introduced earlier, these changes will strengthen the position that the franchise fees are payable for a licence to trade in the future and are not an excise payable directly on
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