Page 164 - Week 01 - Wednesday, 17 February 1993
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BUSINESS FRANCHISE ("X" VIDEOS) (AMENDMENT) BILL 1993
MS FOLLETT (Chief Minister and Treasurer) (3.15): Madam Speaker, I present the Business Franchise ("X" Videos) (Amendment) Bill 1993.
Title read by Clerk.
MS FOLLETT: I move:
That this Bill be agreed to in principle.
This Bill amends the Business Franchise ("X" Videos) Act 1990. The Act provides for the licensing of wholesalers and retailers of X-rated videos located in the Territory. On 15 October last year, the High Court of Australia handed down a decision of considerable significance for the taxation laws of the Australian Capital Territory and the Northern Territory. By a majority decision, four justices to three, the court ruled that the Territories were precluded by section 90 of the Constitution from imposing duties of excise. By way of explanation, an excise has been held by the High Court to be a tax on a stage in the production and distribution of a product before it reaches the consumer.
The court decision to which I refer was given in a case involving an X video licensee in the ACT who had challenged the validity of the tax imposed under the Business Franchise ("X" Videos) Act 1990. The court considered that it was desirable, given the important issues involved, to hear the two main issues separately. The first part of the appeal was: Did section 90 of the Constitution preclude the ACT from imposing an excise? The second part of the appeal was: If the first was decided in the affirmative, did licence fees imposed by the ACT under the X videos Act constitute an excise?
The court's decision and, in particular, the comments of the individual judges have been very helpful in clarifying Territory powers in relation to raising tax revenue. Since self-government, successive ACT governments have considered that we are not constrained, as the States are, from levying excise-type taxes. This was also the view of the Commonwealth. However, somewhat fortuitously, to achieve comparability with tax regimes in the States, the ACT has generally enacted revenue laws which are consistent with equivalent taxes in the States. Such tax laws are therefore within the constraints of section 90 of the Constitution.
To avoid constitutional challenges, the States have developed franchise schemes in relation to liquor, tobacco and petroleum. The essential characteristic of these schemes is that the licence fee is not directly correlated to the value of trading in respect of the licence period. Rather, the fee is determined by reference to trading activity in some prior period. The High Court, most recently in the Philip Morris case in 1989, has ruled that liquor and tobacco fees imposed under business franchise schemes are not excises and are therefore not in breach of section 90 of the Constitution.
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