EXPLANATORY STATEMENT
Radiocommunications (Receiver Licence Tax) Amendment Determination 2010 (No. 1)
Legislative Provisions
The Radiocommunications (Receiver Licence Tax) Amendment Determination 2010 (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, the 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 the 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, the 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, the 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].
The land mobile tax was an appropriate reference point for the fixed licence taxes for two reasons:
- Land mobile services and fixed services shared the same frequency bands; and
- client behaviour indicated that the ‘opportunity cost’ of fixed licences was, at least, as high as the land mobile tax[2].
It was intended that by 2010 the fixed point to multipoint licence tax would be equal to the land mobile tax, while the fixed point to point licence tax would be one quarter of the land mobile tax.
In April 2009, the ACMA implemented the fifth and final increase in licence tax in accordance with this plan, except for fixed services below 960 MHz in remote areas where taxes were set at the 2008 level. The ACMA considered it necessary to suspend increases in those taxes, pending the outcome of a review of administrative pricing.
Purpose and Operation
The Amendment Determination amends the taxing regime for radiocommunications receiver licences to adjust all taxes by a 1.50% adjustment based on the annual CPI movement to June 2009, except for fixed services in remote density areas where taxes are capped at the 2008 level.
Impact and Effect
The impact of the Amendment Determination is generally to increase licence taxes by CPI, maintaining Commonwealth revenue at the same level in real terms. An exception is the licence tax for the fixed remote services mentioned above, which is maintained at the same level as in 2008.
Consultation
When taxes 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 then 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.
In the special case of status quo taxes for remote density areas fixed licences in bands below 960 MHz, the ACMA considered it unnecessary to consult with stakeholders as there were no changes made affecting their licences.
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 heading for the transitional Part of the determination that deals with the new amendment. Section 4.1 of new Part 4 then sets out the relevant definitions.
Section 4.2 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 1.50%.
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. All amounts have been raised by the adjustment of 1.50% except for frequency bands below 960 MHz in remote density areas where the amount of tax remained set at the 2008 level.
Item 4
Item 4 sets out further amendments to specific amounts. These changes include substituting:
- each mention of $238 with $242 for subitem 203(1) in Part 2 of Schedule 2; and
- the amount of $33.36 by the amount of $33.86 (adjustment of 1.50%) for items 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 (Transmitter Licence Tax) Amendment Determination 2005 (No. 1) registered on 18 February 2005.
[2] 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.