Excise Act Review: 7
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Part VII
Summary and Conclusions

Summary

The current excise framework comprises an extensive system of pervasive controls on the production, importation and distribution of alcohol and tobacco products, focusing on the premises where excisable goods are processed or stored rather than the person who owns or controls the goods. The system is rigid and does not easily accommodate change and the implementation of modern business practices.

Brewers, distillers and tobacco manufacturers have indicated that the modern operating environment demands a more flexible framework with less onerous controls and minimal interference with business practices. Vintners have expressed concern that the excise framework does not provide the requisite level of protection necessary to ensure the integrity of the domestic market.

For its part, the federal government recognizes that the current excise framework is outdated and that the archaic legislative structure poses significant operating and administrative difficulties for all parties, including government. There is a recognition that the issues surrounding control and protection of revenue can be addressed, and the integrity of the domestic market strengthened, without imposing an onerous supervisory structure on industry participants.

The revised excise framework put forth in this paper proposes new legislative and administrative structures that will replace strict supervisory control with self-assessment and after-the-fact verification. Critical to the proposed framework is the ability to trace the production, flow and disposition of bulk and packaged goods, complemented by an enforcement function that imposes sanctions where goods are not accounted for within the parameters of the new system.

Conclusions

The proposed framework responds to the concerns expressed by industry and government in a responsible and constructive manner. Returning to the criteria and objectives discussed earlier, the following observations can be made:

• Control and protection of revenue -- will be achieved through a production levy that emphasizes the flow of goods and creates the requisite base for a strong enforcement function;
• Modern administrative function -- will be based on a new legislative framework and founded on voluntary compliance and self-assessment, and will incorporate modern assessment, collection and appeal provisions;
• Ease of compliance -- changes to time and method of remittance will harmonize excise requirements with commercial accounting practices and with other taxes and charges;
• Fairness -- the comprehensive scope of the review process helps to ensure equitable treatment for the alcohol and tobacco industries; and
• Flexibility -- will be fostered through taxation and control structures that focus on ownership and possession of bulk and packaged goods rather than on the minutiae of production and other functional issues.

In conclusion, the comprehensive proposal for a revised excise framework will provide manufacturers with an enhanced ability to manage their production and distribution processes, while allowing government the opportunity to monitor the flow of bulk and packaged goods to determine liability for excise duty. The means for implementing these changes will be new legislation that provides the tools necessary to protect revenue and combat contraband activity, delivered through a more certain and fair administrative function. The outcome is greater efficiency and equity for all parties.

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