EXPLANATORY STATEMENT
Radiocommunications (Receiver Licence Tax) Amendment Determination 2008 (No. 1)
Legislative Provisions
The Radiocommunications (Receiver Licence Tax) Amendment Determination 2008 (No. 1) (“the Amendment Determination”) amends the Radiocommunications (Receiver Licence Tax) Determination 2003 (No. 2) (“the Determination”).
The Determination and Amendment Determination are both made under subsection 7(1) of the Radiocommunications (Receiver Licence Tax) Act 1983 (the Act) which provides that the Australian Communications and Media Authority (ACMA) may determine the amount of tax in respect of:
- the issue of a receiver licence;
- the anniversary of a receiver licence coming into force; and
- the holding of a receiver licence.
Background
Under the Radiocommunications Act 1992, ACMA is responsible for maintaining an efficient, equitable and transparent system of charging for the use of spectrum. The annual tax levied on apparatus licences allows ACMA to create economic incentives for efficient use of the spectrum. It encourages licensees to use the minimum amount of bandwidth for their needs, move to less congested bands, and surrender licences that are no longer needed.
Where frequencies are in very limited supply, ACMA seeks to ensure efficient use of spectrum by allocating channels to licensees with the greatest willingness to pay. If a tax is too low, licensees with more economically efficient uses may be excluded, while those with low-value uses are occupying channels.
In 2003, ACMA’s precursor, the Australian Communications Authority (ACA), increased the tax applied to fixed licence types operating in bands below 960 MHz, in response to increasing congestion in fixed licence segments of these spectrum bands.
At the time, a decision was made to increase the tax in five annual increments to bring the fixed licence tax into parity with the land mobile tax[1].
In April of 2005, 2006, and 2007, ACMA increased the fixed licence tax in accordance with this plan. It is intended that by 2010, the fixed receive licence tax will be one quarter of the land mobile tax. Fixed receive services deny around one quarter of the spectrum of land mobile services.
The land mobile tax is an appropriate reference point for the fixed licence taxes as they share the same frequency bands and client behaviour indicates that the ‘opportunity cost’ of fixed licences is, at least, as high as the land mobile tax. Opportunity cost is the value of spectrum in the best alternative use. In its 2002 report on radiocommunications, the Productivity Commission recommended that ACA price spectrum on its opportunity cost.
Purpose and Operation
The Amendment Determination amends the taxing regime for radiocommunications receiver licences to:
- Raise taxes for fixed services in bands below 960 MHz in accordance with ACMA’s five year plan.
- Adjust all taxes by a 2.10% adjustment based on the annual CPI movement to June 2007.
Impact and Effect
The Amendment Determination will enhance the efficiency and equity of the taxing regime by further aligning the taxes for fixed and land mobile licences in the same bands. As a result of the changes, licensees with fixed licences in bands below 960 MHz will face higher taxes. This is a necessary consequence of the realignment to improve the equity and efficiency of the fee model.
Consultation
When fees for fixed licences in bands below 960 MHz were increased in 2003, the ACA wrote to all affected licensees stating the reason for the increase and advising that further increases would be implemented.
In the year following April 2005, fixed licensees were informed in renewal notices of the second increase, together with information that their licence tax will increase each year until 2010 until the point to multipoint tax is equal to the land mobile tax and the point to point tax is one-quarter of the land mobile tax.
The Office of Regulation Review advised that the RIS prepared for the first increase in the five year plan would apply to all five tax increases and that consultation is not required for CPI adjustments.
Legal and other requirements
The Amendment Determination is a legislative instrument. All legal and other requirements for the making of the Amendment Determination have been met.
Detailed description of the Amendment Determination
Details of the Amendment Determination are in Attachment 1.
ATTACHMENT 1
Notes on the instrument
Section 1 Name of Determination
Section 1 provides the name of the Amendment Determination.
Section 2 Commencement
Section 2 provides that the Amendment Determination commences on the day after it is registered.
Section 3 Amendment of Radiocommunications (Receiver Licence Tax) Determination 2003 (No. 2)
Section 3 provides that Schedule 1 of the Amendment Determination amends the Radiocommunications (Receiver Licence Tax) Determination 2003 (No. 2).
Schedule 1 Amendments
Item 1
Item 1 sets out the name of the amendment determination in Section 4.1 of Part 4. Item 1 also substitutes new transitional arrangements. Although the Amendment Determination commences on the day after registration, in some instances where the tax is payable after this date, the amount of tax will continue to be based on the Radiocommunications (Receiver Licence Tax) Determination 2003 (No. 2) as in force immediately before the commencement of the Amendment Determination. The purpose of these transitional arrangements is to allow the amount of tax shown on renewal notices and instalment notices sent out prior to the commencement of the Amendment Determination, but payable after the commencement of the Amendment Determination, to continue to be valid.
Item 2
Item 2 substitutes a new table 202 (and accompanying note) which sets out the amount of tax for each kHz of bandwidth for the licensing options specified in Part 2 of Schedule 2. The amount of tax varies with frequency range and location of the spectrum access. All amounts have been raised by the adjustment of 2.10%.
Item 3
Item 3 substitutes a new table 302 (and accompanying note) which sets out the amount of tax for each kHz of bandwidth for the licensing options specified in Part 3 of Schedule 2. The amount of tax varies with frequency range and location of the spectrum access. All amounts in frequency bands below 960 MHz have been raised in the fourth increment of a program to align fixed licence taxes with land mobile licence taxes. All amounts have been raised by the adjustment of 2.10%.
Item 4
Item 4 sets out further amendments to specific amounts. These changes include substituting:
- the amount of $223 with the amount of $228 for subitem 203(1) in Part 2 of Schedule 2; and
- the amount of $31.27 with the amount of $31.93 (adjustment of 2.10%) for item 204 and 303 of Schedule 2 and step 3 of tables 103, 104 and 105 in Schedule 3.
[1] The regulation impact statement for this five year plan was tabled with the explanatory statement for changes to the Radiocommunications (Receiver Licence Tax) Amendment Determination 2005 (No. 1) registered on 18 February 2005.