FOR PRESS: ixOL B, P. M. No. 21/ 16
EXPORT INCENTIVES
Statement by the Prime Minister, Mr. John Gorton
The Prime Minister, Mr. Gorton, today outlined a
number of changes which the Government has decided to make in
the two export incentive schemes which have been in operation
since 1961. " In the light vf the facts beñ forc it", said the
Prime Minister, " the Government is convinced that as a result
of the proposed changes these schemes will offer better and
more effective incentives to encourage the continued growth
of Australian exports".
" During the review of the schemes undertaken by the
Government we received many suggestions fr'om Ind~ ividual
e" lxIpn otrhteisrs reagnad rde xIp owrto uoldr gpaanyi sasptieocnisa" l, trMi7b uteo r to thceo nwtiohruke do. f'
the Export Development Council and the Australian Manufacturers'
Export Council, both of whom had made detailed submissions
which had been of great assistance to the Government".
The Prime Minister pointed out that, under the
proposed arrangements, rebates of payroll tax would continue
to be allowed in respect of increases in export sales and
income tax concessions would be available for eligible
expenditure incurred in promoting exports. However,
significant changes were proposed for both schemes.
Payroll Tax Rebates Scheme
So far as the Payroll Tax Rebate Scheme was concerned
the major change proposed was the introduction of a new and
simplified formula relating rebate entitlements only to increases
in export sales. The new formula will provide that the
entitlement to a rebate of payroll tax would amount to 10.5%
of the increase in exports. The increase in exports will be
calculated by deducting from the current year's exports the
average annual exports in a base period. The percentage factor
of 10.5% used in the formula will be reviewed from time to time.
The present base period will be replaced by a three
year period which moves forward each year but remains five years
behind the year of export. For example, in 1968/ 69, the first
year of operation of the new scheme, the base period will be
the three years 1960/ 51 to 1962/ 63. In the next year, 1969/ 70
the base period will be the three years 1961/ 62 to 1963/ 64.
Special provision will be made for phasing in new exporters.
Mi. r. Gorton explained that this five year " lag" to
the base period was designed to reduce the impact of switching
from the previous fixed base of 1958/ 59, 1959/ 60. He said that
under the proposed scheme most exporters would have a greater
incentive to increase their exports than under the former
scheme. 12
2.
The Prime Minister added that a criticism levelled
at the present scheme was that many exporters achieved export
results which would entitle them-to greater benefits if the
rebate were not limited to the amount of the payroll tax that
they paid in that year. The new scheme would include a new
provision which will allow exporters to carry forward for up
to three years some of their " excess". In addition it was
proposed to continue the export certificate systemn under
modified conditions which should make the system more attractive
to both exporters and their suppliers of components or materials.
The scope of the scheme would be extended by the
inclusion in the definition of export sales of certain items
not included under the existing scheme.
Special arrangements would also be made to assist
exporters whose rebate entitlements were found to be materially
affected by the devaluation of foreigyn currencies lat6 last
year. The scheme would be directed to encouraging the
export of manufactures and primary products, where the need
for incentives is greatest. Exports of petroleum, petroleum
products, minerals, mineral concentrates and alumina will not
participate in the new payroll tax scheme.
Market Development Allowance
The main change to the Export Market Development
Allowance will be the allowance of a rebate of income tax of
42.5 cents in the in respect of eligible promotional expendituire
instead of an additional deduction from income. In the case of
a public company for example, the effective rate of benefit
would be increased from an equivalent of an income tax rebate
of about 37.5 cents in the S under the old scheme to a rebate
of 42.5 cents under the new scheme. The scope of the schemea
would also be extended to cover several classes of expenditure
not at present eli~ gible.
The Prime Minister said that the Acting Minister for
Trade and Industry, Mr. Anthony, would be issuing a mocrsL
detailed statement of the proposed changes in the two ince3ntives.
He emphasised, however, that a comprehensive explanation of
the two incentives could not be made until the Treasurer,
Mr. McMahon, introduced the legislation into Parliament.
He concluded by saying that both schemes would come
into effect from 1st July, 1968, and would continue to operate
for a period of 5 years from that date. The current incentives
expire on 30th June, 1968.
CANBERRA 14th February, 1968.