The government is keen to impose the current Goods and Services Tax (GST) on “intangible” services, including iTunes purchases, Uber rides and overseas streaming services, such as Netflix, which finally arrived in Australia in March.
Federal and state treasurers have agreed on a proposed tax model, that will see the 10% tax added on to these goods, to keep up with advancements in the purchasing model, Fairfax Media reported.
The GST changes are proposed for the May Federal Budget, which would see billions of dollars added to government coffers. Opposition Leader Bill Shorten said he would look at the proposal, but he believes it should be targeting the “big end of town,” according to AAP.
“I’ve some sympathy for people who say that these Internet-provided media products don’t pay the GST, but I think we need to go back one step,” he said.
Currently, there is a lot of talk in Australia about the larger Internet companies avoiding tax. Recently, Uber was accused by taxi booking service GoCatch of avoiding GST payments, yet Uber claimed it is fulfilling its tax obligations locally.
Executives from Google, Microsoft and Apple have been subject to the corporate tax avoidance inquiry this week, where they were asked questions regarding funneling profits overseas to avoid high Australian corporate tax rates.
Consumers end up the hardest hit when it comes to new tax introductions. If the proposed GST changes are included in the May Budget, locals can get used to paying 10% more for services purchased from international organisations — especially digital companies.
The move could also be followed by a reduction in the maximum cost of goods you can purchase from overseas suppliers or websites without being hit with GST. At the moment this amount is $1000, but the proposed reduction could see the benefit of Australians buying products online sucked away.
Consumer advocate group Choice, told ABC Radio, that Australians can avoid the tax on downloaded goods by using a virtual private network (VPN) to appear overseas. Choice CEO Alan Kirkland said the government should be looking at the heart of the issue, which is the ridiculous local costs of TV, movies and music and the release delays.
“We need to make it easier … in order to encourage greater competition,” Kirkland said.
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