First it was reported that the 'Netflix tax' was being rejected, then Fairfax reported it was back in play. Now Federal Treasurer Joe Hockey has confirmed in a press conference that the government is planning to implement a new tax on digital services and Australian consumers will be asked to pick up the bill.
This means, essentially, that Australians will be paying a form of GST on services like Steam that amounts to a 10% increase on digital products. Joe Hockey expects this change to bring in $350 million in revenue over four years.
Currently users aren't being charged GST on digital services like Steam and Netflix, which certain local retailers have flagged as being unfair, since they have to charge consumers more for the same product in certain cases — this applies especially to video games. Currently products imported into Australia avoid the GST provided they are under $1000. A Productivity Commission stated it would essentially be more hassle than it's worth to charge GST on those products.
Digital products, however, that's a different ballgame.
According to Hockey:
What we’re doing is going to digital providers overseas and saying ‘can you apply the GST to the products you provide into Australia?’. They [the tech companies] are agreeable to it. It’s not their profits [being taxed]. It’s a tax collected and they remit it back to the country where that [consumption tax] occurs.
Legislation will be tabled before the house tomorrow night during the delivery of the budget.