EXPLANATORY STATEMENT
Radiocommunications (Transmitter Licence Tax) Amendment Determination 2007 (No. 1)
Made by the Australian Communications and Media Authority under subsection 7(1) of the Radiocommunications (Transmitter Licence Tax) Act 1983
Legislative Provisions
The Radiocommunications (Transmitter Licence Tax) Amendment Determination 2007 (No. 1) (“the Amendment Determination”) amends the Radiocommunications (Transmitter Licence Tax) Determination 2003 (No. 2) (“the Determination”).
Subsection 7 (1) of the Radiocommunications (Transmitter Licence Tax) Act 1983 (the Act) provides that the Australian Communications and Media Authority (ACMA) may determine the amount of tax in respect of:
- the issue of a transmitter licence;
- the anniversary of a transmitter licence coming into force; and
- the holding of a transmitter 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, to move to less congested bands, and to surrender licences 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.
It was decided at the time to increase the tax in five annual increments to bring the fixed licence tax into parity with the land mobile tax[1]
In April 2005 and April 2006, ACMA increased the fixed licence tax in accordance with this plan. It is intended that by 2009 the fixed point to multipoint licence tax will be equal to the land mobile tax, while the fixed point to point licence tax will be one quarter of the land mobile tax. While the amount of spectrum used by point to multipoint and land mobile services is similar, point to point services use less spectrum than either as they are more directional.
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. The Productivity Commission, in its 2002 report on radiocommunications, recommended that ACA price spectrum on its opportunity cost.
Purpose and Operation
The Amendment Determination amends the taxing regime for radiocommunications transmitter 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 4.0% adjustment based on the annual CPI movement to June 2006.
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 2005, fixed licensees were informed in renewal notices that the second increase, would take place in 2006 and also that their licence tax would increase each year until 2009, when the point to multipoint tax will be 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 citation of the Amendment Determination.
Section 2 Commencement
Section 2 provides for the commencement of the Amendment Determination.
Section 3 Amendment of Radiocommunications (Transmitter Licence Tax) Determination 2003 (No. 2)
Section 3 provides that Schedule 1 of the Amendment Determination amends the Radiocommunications (Transmitter Licence Tax) Determination 2003 (No. 2).
Schedule 1 Amendments
Item 1
Item 1 omits a note referencing outdated transitional arrangements.
Item 2
Item 2 omits outdated transitional arrangements.
Item 3
Item 3 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 (Transmitter 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 4
Item 4 omits outdated transitional arrangements.
Item 5
Item 5 sets out the amount of tax for each kHz of bandwidth for the licensing options specified in Part 2 of Schedule 2 (assigned licences). The amount of tax varies with frequency range and location of the spectrum access. All amounts have been raised by the adjustment of 4.0%.
Item 6
Item 6 raises the minimum tax for the licensing options specified in Part 2 of Schedule 2 (assigned licences) from $30.07 to $31.27, an increase of 4.0%.
Item 7
Item 7 sets out the amount of tax for each kHz of bandwidth for the licensing options specified in Part 3 of Schedule 2 (assigned licences in high demand frequency bands). The amount of tax varies with frequency range and density of the spectrum access. All amounts have been raised by the adjustment of 4.0%.
Item 8
Item 8 raises the minimum tax for the licensing options specified in Part 3 of Schedule 2 (assigned licences in high demand frequency bands) from $30.07 to $31.27, an increase of 4.0%.
Item 9
Item 9 sets out the amount of tax for each kHz of bandwidth for the licensing options specified in Part 4 of Schedule 2 (assigned fixed point to point licences). The amount of tax varies with frequency range and location of the spectrum access. All amounts have been raised by the adjustment of 4.0%, and amounts in frequency bands below 960 MHz have been raised in the third increment of a program to align fixed licence taxes with land mobile licence taxes.
Item 10
Item 10 raises the minimum tax for the licensing options specified in Part 4 of Schedule 2 (assigned fixed point to point licences) from $30.07 to $31.27, an increase of 4.0%.
Item 11
Item 11 sets out the amount of tax for each kHz of bandwidth for the licensing options specified in Part 5 of Schedule 2 (assigned fixed point to multipoint licences). The amount of tax varies with frequency range and location of the spectrum access. All amounts have been raised by the adjustment of 4.0%, and amounts in frequency bands below 960 MHz have been raised in the third increment of a program to align fixed licence taxes with land mobile licence taxes.
Item 12
Item 12 raises the minimum tax for the licensing options specified in Part 5 of Schedule 2 (assigned fixed point to multipoint licences) from $30.07 to $31.27, an increase of 4.0%.
Item 13
Item 13 sets out the amount of tax for each kHz of bandwidth for the licensing option specified in Part 6 of Schedule 2 (fixed television outside broadcast station). The amount of tax varies with frequency range and location of the spectrum access. All amounts have been raised by the adjustment of 4.0%,
Item 14
Item 14 raises the minimum tax for the licensing options specified in Part 6 of Schedule 2 (fixed television outside broadcast station) from $30.07 to $31.27, an increase of 4.0%.
Item 15
Item 15 sets out the amount of tax for the licensing options specified in Part 7 of Schedule 2 (assigned licences subject to a fixed annual tax). All amounts have been raised by the adjustment of 4.0%.
Item 16
Item 16 sets out the amount of tax for certain high power open narrowcasting licences specified in Part 8 of Schedule 2. All amounts have been raised by the adjustment of 4.0%.
Item 17
Item 17 sets out the amount of tax for certain high power open narrowcasting licences specified in Part 9 of Schedule 2. All amounts have been raised by the adjustment of 4.0%.
Item 18
Item 14 raises the minimum tax for high power open narrowcasting licences specified in Part 9 of Schedule 2 from $719 to $748, an increase of 4.0%.
Item 19
Item 19 sets out the amount of tax for the licensing options specified in Part 10 of Schedule 2 (non-assigned licences). All amounts have been raised by the adjustment of 4.0%.
Item 20
Item 20 ensures the minimum annual amount of tax for all licences, regardless of the period of the licence, is $31.27 (adjustment of 4.0%).
[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.