A new tax—dubbed the ‘Netflix Tax’—may soon arrive in Australia to make it rain on your online parade, as Treasurer Joe Hockey has announced plans for an extension of the GST to media products. We’re talking music, books, TV shows (including streaming services such as Netflix) and movies being stung with an extra 10% tax – taken directly from your wallet.
This is why we can’t have nice things, Australia.
The proposition by señor cigar may crop up in next month’s Federal budget (praying for us all), and will reportedly be a measure of “integrity”, according to Hockey – not a widening of the GST – even though, of course, it literally is nothing but. Hockey claims the Netflix tax will add “billions” of dollars to the Australian economy. Hockey summed it up in saying:
“The integrity measures were in relation to what is emerging as an OECD consensus, that GST should be charged at the source, so that a company providing intangible services into Australia, such as media services or so on, wherever they are located they should charge GST on those services.”
According to the Australian Financial Review, the government also plans to push for similar taxing on goods under $1000 online. Nice knowing you, Shopbop.
The proposed Netflix Tax for next month’s budget comes at a time in Australia where piracy is rampant—VPN’s are becoming increasingly commonplace to avoid instances like this week’s ‘Dallas Buyer’s Club’ ruling—where media outlets are scrambling with paywalls, and customers are turning away from traditional music sales through illegal downloads or streaming services.
Establishing streaming services like Netflix, Stan, Rdio and Spotify have been absurdly successful because outlets listened to Australian consumers who were often left behind overseas releases – and were pretty much forced to go down the piracy route. But I’d hazard a guess that not all Aussies love to pirate, and that the niggling feeling of guilt after downloading a TV show illegally is more common than you might think. Streaming services are an economical solution to that issue – why bother pirating OITNB when you can watch it legally for under a tenner?
But placing additional burden to that cost through GST…? Sadly, consumers might not stay convinced.
The issue has also cropped up as heat has risen over offshore companies trading in Australia—such as Apple, Google, Netflix—who have successfully dodged the Australian tax their local counterparts pay up. Yesterday, tech giants Apple, Google and Microsoft collectively announced that they will face an audit by the ATO, due to this tax “avoidance”. Google’s Australian profits in 2013 were a relatively modest $46 million, of which the company paid $7 million in tax to Australia, according to SMH. That $46 million figure, however, leaves out an estimated $2 billion revenue from local ads, as these are booked overseas. Taxing 15 per cent on that revenue alone would straight away add around $300 million to the Australian economy.
Making the little guy pay up when the big guys are going about their biz through tax loopholes? Not happy, Hockey.
via SMH.
Lead image by Stefan Postles via Getty.
