Treasurer Joe Hockey is set to announce a 'downloads tax' in tonight's federal budget – a boon for some of Australia's retailers.
The tax has also been described as a 'Netflix' tax – thanks to the streaming video on demand (SVOD) giant charging users around 10% less than its competitors Stan and Presto – the equivalent of the GST not being charged to users.
The tax will apply to all digital downloads including music, apps, e-books and movies as well as online services such as car-sharing service Uber and accommodation service Airbnb. Apple's iTunes and Google's Play Store already charge Australian consumers GST.
Harvey Norman Holdings Ltd (ASX: HVN) boss Gerry Harvey has welcomed the move, telling Fairfax media, "I don't think you'll find too many people arguing against it."
It could also provide a boost to other retailers such as JB Hi-Fi Limited (ASX: JBH), Dick Smith Holdings Ltd (ASX: DSH), as the price differential between local and offshore digital purchases narrows. JB Hi-Fi also offers its JB Hi-Fi Now service, offering digital music, movies and books.
Media companies have also praised the move, with Harold Mitchell, chairman of the tree-to-air television lobby Free TV suggesting that it gives Australian media a level playing field. Seven West Media Limited (ASX: SWM) CEO Tim Worner also called it a win for producers of Australian content.
Australian National Retailers Association chief executive Anna McPhee is also pleased, calling it the first step in a crackdown on tax avoidance. Ms McPhee has called on the government to extend the tax to goods under $1,000 as well.
"We must strengthen the integrity of Australia's tax system and ensure similar types of goods and services consumed domestically are taxed in the same way, no matter how that purchase occurs."
Currently, products bought offshore for under $1,000 are exempt from GST, but it remains to be seen whether the government will consider lowering the GST bar to around $30 – as some countries already do.
