CUSTOMS (AMENDMENT) BILL

Order for Second Reading read.

The Minister for Finance (Dr Richard Hu Tsu Tau): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

The Customs (Amendment) Bill 1993 seeks to amend the Customs Act to provide for excise duties on imports, prevent smuggling, improve administration of the Act and to regularise current Customs practices.

Levying Excise Duties on Imports

The outcome of the Uruguay Round of GATT negotiations may require us to lower our ad valorem import duties. In particular, import duties on motor vehicles would be affected. In order to comply with the possible GATT requirement, without at the same time undermining our objective of containing car growth, we would have to provide for the levying of excise duties on imports. Excise duties at present can only be levied on locally-manufactured goods.

Traders and importers will not be affected as excise duties will be levied such that the total quantum of tax payable at the end of the day will be the same. Hong Kong, Thailand and many of the EC countries also impose excise duties on imports. Clauses 2 and 5 amend sections 3 and 10 of the Act to effect this.

Preventing Smuggling

At present, the Act allows agents to make changes to their cargo manifests for any reasonable shortfall or excess in the cargo, as well as for "any other cause". This presents a loophole for smugglers to amend the description of the goods once an offence is detected. I have therefore replaced the "any other cause" provision with "such other cause as the Minister may by order specify". The Act would also be amended to require cargo manifests for goods brought into Singapore, and not just for goods destined for Singapore, as is now the case. This is to prevent the smuggling of goods on the pretext that they are not destined for Singapore. Clauses 9 and 10 amend sections 39 and 40 of the Act to effect these changes.

In view of the higher duty rates for cigarettes and liquor, a higher penalty is necessary to deter smuggling. The maximum fine for compoundable offences would be raised from $2,000 to $5,000. The maximum fine for refusing to answer or giving false information would also be raised from $1,000 to $5,000; and the maximum prison sentence from 6 to 12 months. This will bring it in line with the penalty for making incorrect declarations and falsifying documents, which currently carries a maximum fine of $10,000 and a maximum prison term of 12 months. Clauses 24 and 26 amend sections 126 and 129 to effect these changes.

Improving Administration of the Act

Recent developments in the shipping industry have given rise to third party agents, who coordinate the shipping of cargo on behalf of shipping agents. The Act, however, does not allow such third party agents to submit cargo manifests. Those who do so on behalf of shipping agents are therefore not accountable for their submissions. I have thus amended the Act to allow shipping or aircraft agents to authorise another person to submit cargo manifests on their behalf; and for such authorised persons to be accountable for their submissions. Clause 9 amends section 39 to provide for this change.

The detention period of arrests without a warrant would be extended from 24 to 48 hours, to be in line with provisions in the Criminal Procedure Code. It will give Customs officers enough time to ensure that investigations are more thorough. Clause 22 amends section 112 to effect this change.

Currently, it is an offence for tourists to sell, exchange or give away any duty free entitlements purchased in Singapore. This should also apply to returning residents, as well as to purchases from overseas. The Act will thus be amended to extend the provision to all travellers and their duty free entitlements, including those purchased overseas. Clause 27 amends section 130 to effect this change.

The three-quarter tank rule at present only applies to Singapore cars leaving through the Causeway at Woodlands. The rule will be extended to cover such cars leaving Singapore through all exit points. Clause 28 amends section 136A to effect this change.

Regularising Current Practices

I am also amending sections 34, 37 and 42 of the Act via clauses 7, 8 and 12 to formalise the following Customs practices that are not currently provided for in the Act:

(a) dispensing with the need for permits for goods which are transhipped within the same Free Trade Zone;

(b) requiring permits for goods removed from the Free Trade Zone; and

(c) making the pilot, owner or agent of an aircraft similarly liable as the captain, owner or agent of a ship, in respect of payment of duty on unaccounted goods.

Other Minor Amendments

The remaining seven amendments, which are minor, are to provide for the following:

(a) Customs officers to be allowed to make copies of documents in the course of conducting any search on premises; [Clause 19]

(b) notices to a body of persons or company to be deemed served when they are delivered to the secretary or any officer of the body of persons or company; [Clause 17]

(c) the Director-General to be allowed to waive the recovery of revenue which is less than $20, in each case; [Clause 6]

(d) licensed liquor establishments to accept payments for purchases through credit cards, charge cards, gift vouchers and other modes approved by the Director-General; [Clause 15]

(e) the appointment of new grades of Customs officers; [Clauses 3 and 4]

(f) the Minister to prescribe regulations for the ranks, uniforms, accoutrements and equipment of Customs officers; [Clause 32] and finally,

(g) the adoption of the International Organisation of Legal Metrology (OIML) standard for measuring alcoholic strength. [Clause 2]

Sir, I beg to move.

Question proposed.

Mr Chiam See Tong: Sir, may I get a clarification from the Minister? I believe I heard him mention that import duties on cars would be lowered because of some GATT arrangements. Can the Minister please elaborate on that point?

Dr Richard Hu Tsu Tau: Under the GATT rules, countries which accede to the GATT arrangements are required over time to lower import tariffs to an undetermined figure. Our import duties on cars are quite high now. If we accede to GATT, assuming the GATT requirement is approved in the near future, we would be faced by this requirement to lower import duties. In order not to allow this requirement to reduce the price of cars, we will replace the decrease in import duties with an exact equivalent in excise tax. So the cost of the car to the buyer will remain exactly the same.

Mr Chiam See Tong: That is something which I do not understand. Because, in effect, you are not complying with GATT requirements. In effect, you are just juggling with your taxes.

Dr Richard Hu Tsu Tau: GATT does not impose requirements on the internal taxes of a country. That is the privilege or the sovereignty of the country. You can impose any taxes you like on your own people but not on imported goods. I accept that the effect is the same but, nevertheless, that is the law.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. - [Dr Richard Hu Tsu Tau].

Bill considered in Committee; reported without amendment; read a Third time and passed.