We Might Be Paying Tax On Steam After All

First we thought it might be happening, then it was reported it wasn't happening, but now it's apparently happening again. Come the Federal Budget the government may tell Australians they have to start paying tax on Steam.

Earlier this week The Australian reported that Ministers had dismissed the idea of hastily adding a so-called 'Netflix Tax' to digital goods bought online. There is an issue to be solved: retailers have to apply GST on goods bought within Australia, but goods bought digitally overseas don't have the same problem. Previously it was reported that the Federal Government wanted to work out a more elegant solution that reduced the $1000 threshold currently applied on goods bought overseas.

Regardless, it looks that we may be paying an extra tax on Steam purchases -- and eBook purchases and any digital purchase for that matter -- sooner rather than later.

The Age is now reporting that the 'Netflix Tax' is back in the running for the upcoming budget and it would add 10% to all digital purchases. Apparently the lack of a tax in this area of retail amounts to a potential loss of $1 billion in tax revenue. That's a lot of money, and it makes competition difficult for local retailers who have to deal with GST.

But at this point it's difficult to say with any certainty whether the upcoming budget will make these changes or not. We'll find out next Tuesday when the 2015 budget is released.

Federal budget 2015: GST on Netflix and more on the way [SMH]


Comments

    Im getting flashbacks to the days games were $110 in store...only now they'll be digital!

      I wonder with that if they will bring back VHS sized cardboard CD cases?

      Yeh 10% tax on top of GTAV price on Steam would put it at around $105au. Not far off.

        It's pretty bullshit.
        GTA's US price
        + region pricing
        + exchange rate
        + GST
        = +75% in price
        we'd nearly be paying double!

    A key difference with Steam (over Netflix) is where they still charge in USD - I believe this helps them to sidestep a few local laws.
    I also believe that Valve would have accountants on the books with more idea about Australian tax law than any of the current mob of idiots in Canberra, so hey, it'll be interesting.

    We've been paying tax all along. It's called the Australian Tax, whereby we pay more than elsewhere in the world.

      Yeah, but the Government doesn't get their sticky jam hands on the Australia Tax.

        Yeah, multinational corporations do instead.

    Back to pirating.

      See I don't pirate games and I disagree with it but the more this shit keeps happening the more I find it a valid form of protest.

      I still don't find it morally justifiable as a reason to get free games and I won't peraonally do it but push is coming to shove and we need a way to show we aren't willing to bend over and get fucked anymore.

    Couldn't you just use a VPN and buy from steam and other websites to avoid the GST? I'm sure most Aussies will have VPNs anyway, given the metadata spying.

      I suspect no. AFAIK, Valve will have your residency on file.

      That said, we can always look up to see if the Europeans can navigate around the VAT.

        Well, that's assuming I bought the key through Steam. What about other game retailers like humble bundle, bundle stars, GMG? They don't ask me where I live.

      Bypassing the geoblocking of Steam is actually a violation of their Terms of Service, and can result in your account being suspended

    what are they going to do what that Tax money ? renovate their homes & build more M5's with 2 lanes ? and buy some steam games so the money goes right back to them ?

    Last edited 07/05/15 10:15 am

      Or you know... use it to make a small dent in the gigantic deficits the country has been, and will be, running up.

      There are better ways to claw back revenue in the budget, but they are political suicide for either of the major parties.

      This is just a more palatable way of getting some revenue as there will be less backlash and it'll likely be quickly forgotten (relatively speaking).

      Last edited 07/05/15 10:31 am

        Yet WA see's hardly any of it.

          Yes, because they are getting shit tonnes of windfall revenues from mining, and there are other areas with greater socioeconomic need for funds in order to provide relevant services.
          WA can complain about not getting GST, but it's because the current revenues they receive from other sources (their own tax bases) is sufficient to fund the services at the standard they are being provided given their socioeconomic demographics.

          That's how tax systems work in social democratic societies.

            most revenue from mining does not stay in WA. Majority of Mining companies in WA aren't Australian owned. I work for one of the biggest in WA which is American Owned - good ol texaco

            I went over east for the first time early this year and was blown away at how better the infrastructure is over there and how much cheaper everything is. Eastern states have it pretty easy if you ask me.

            Not everyone is WA is in the mining industry, to be frank the only people that benefit from Mining are the Mining companies and employees of said mining companies.

            Last edited 07/05/15 2:38 pm

              But the WA Government does get windfall revenues from mining. That's the thing. WA's tax base (and the level of assessed need, as determined by the Commonwealth Grants Commission) has shifted significantly as a result of the mining industry.

              The mining royalties has significantly lifted their budget revenues, as a result, their GST allocation declined. So yes, while profits from mining don't even stay in the country, the WA government has received an increase in revenue.

              This increase has been partially offset through GST distributions.

          Not true at all. For years, WA received a hugely disproportionate slice of the federal budget. Then, after a while, the WA economy turned around and no longer needs said assistance. Now they are self-reliant and have a substantial surplus of their own, however, that money does not come back to the eastern states whose money was given to them in the first place, but is rather reinvested back into WA. So don't complain too much about not seeing more of the budget. WA has already received far more per person than states like SA for example

        Yeah, there is nothing better than watching the LNP tank the economy, then apply extra taxes to make up the deficit.

        Actually, the last few reports by the productivity commission have pretty strongly indicated that it's far more likely to cost more to retrieve the tax than will be earned in tax itself.

        We'll be SACRIFICING hospitals and roads and police for the sake of making consumers pay more.
        It's kind of lose:lose.

          That's a bummer... I actually wouldn't mind paying GST on digital purchases (in AUD mind you) as it makes sense that we pay it other goods.

          Knew that imposing tax on < $1000 physical goods was going to be stupidly expensive but didn't know that'd translate to digital.

            I strongly suspect that digital is cheaper than physical thanks to customs being involved, but that was a factor of $500M revenue to $2B expense. The bar was very low.

            I think the major factor of the cost is less about the properties of the goods themselves, and more to do with interfacing with foreign businesses in foreign countries with their own tax laws.

    Hopefully if steam has to do GST they start pricing stuff in AUS $

      Well it seems fair since we're getting a regional version of Steam anyway.

        Something tells me it will just cost us more

    Well, the easiest solution is for online retailers to say "No service for Australia, keeping track of their tax is too hard." and stop shipping/serving data to Australia (Amazon opposed the Marketplace Fairness Act in the US for a long time because of the difficulty). Then when everyone complains about it the government does a backflip followed by a cartwheel and a half pike and while everyone's stunned and amazed, sneak the tax back in somewhere else.

    Last edited 07/05/15 10:26 am

      As much as I hate that idea, I think that'd be the best option too...I doubt Australians make enough impact in their profit for them to continue servicing us while our government is being greedy.

        I think it'd be fascinating to see what happens out of it. Piracy would explode, of course, when nothing is legally available. But with nothing available, we'd actually get some REAL numbers on what the lost revenue is. How big a market Australia actually is, for its cost to service. We might be pleasantly surprised that we're actually quite valuable. We might discover there's a negligible difference and just pirate everything always forever.

      No the easiest thing for Valve to do is say, "We arent going to collect GST. We don't employ anyone in Australia and haven't set foot in Australia. Good luck ATO". What is our government meant to do?

    Or they could, you know, tax big companies the whole 30% and generate approx $70 Billion. But whatever.

      Remove or quarantine negative gearing.
      Remove excessive concessions on superannuation contributions and withdrawals ahead of actual retirement
      Broaden GST and/or bump it up 1% or 2%

      So many options out there... But the general public is incredibly resistant to paying more because we've gotten so used to getting tax cuts the last 15 years. The idea of paying more in tax tends to send people into a purple faced, expletive laden spittle flying fit of rage.

        Not the GST. Don't up the GST. The richies who earn thousands only buy the same amount of groceries as anyone else. All you're doing is slugging people who are already under the poverty line.

          How much of the average trolley/basket is made up of GST free items now? How much would the average price of a grocery shop change if it was broadened to include fresh foods?

          What about health/medical that remains largely GST free. An ABC article from earlier this year had medical spend at around $150 billion a year. To quote... Provided the personal tax system is rebalanced, with adequate compensation for frequent users of healthcare services, especially the elderly, the chronically ill, and young families, there is no economically rational reason against consumption taxes applying to health goods and services.

          I understand the general resistance to changes to the GST but consumption based taxes are a good way to increase general revenue.

          Last edited 07/05/15 2:41 pm

            You tax the rich before you tax the poor. If you want to increase general revenue streams, you take an axe to all those tax loops and breaks. Big business subsidies and all that other rubbish. Then maybe cut some pollie wages to be more in line with the rest of the country/world.

            Simply saying "lets increase the GST" is saying "well, lets tax the poor just that little bit more". Sorry man, we can't afford it. We really can't.

        Is it the general public that is resistant to those changes? Or the politicians think the general public is?
        I'm all fr the removal of negative gearing. It's a bad tax concession to households who don't need it. Same with various forms of family tax benefits.

    it can go in the budget but labor and greens and indpendants will not support it thus it wont happen

    Let's do some calculations.

    Call of Duty 4 is usually US$50. If they add the GST to that, making the base price US$55, that means the current price in Australian dollars is AU$69 (The price is similar if the GST is added to the AUD conversion for the US$50)

    So not only do we get overcharged with an arbitrary tax (CoD4 is normally US$20 on the US Steam Store), but instead of trying to fix the problem, the government just wants to make it worse and yet wonders why everyone pirates.

    I would be completely happy to pay a 10% tax on Steam games *IF* publishers didn't have the cock to hike up the price for Australia reasons. Its bad enough that we're paying 30% more because of currency conversion, but slapping an extra 30-50% on top as well is just insane.

    Why would publishers like Activision or Bethesda cut into their profit margin, they'll just throw this new tax ontop of their inflated prices already. I'd say its pretty clear that despite their increased pirces, they're not paying GST otherwise the government wouldn't feel the need to apply this tax.

    This just means I'll be buying from outside Steam for Steam keys way more often.

      And back to the glory days of pirating \o/

        Which is sad because I don't want to pirate, I genuinely want to support game developers.

        But between the hiked up prices of games in Australia and the new tax, the simplest thing to do is vote with your wallets.

        Not that that has done much in the past, like the MW2 dedicated servers boycott...

        "Australia Tax" or GST...take your pick, I'm not paying for both.

      The "Australia Tax" already has me doing this.

      I think the last AAA game I bought directly on Steam was GTA V. Before that, Alien: Isolation according to my account history.

      Meanwhile, my OzGameShop email order list has grown massively or I've waited until it was part of a sale.

    The change would not affect the price of iTunes downloads. Apple says it already pays GST on every sale in Australia including downloads.

    I will call bullshit on this. Australian Governmental IT departments aren't smart enough to create a system that knows the difference between some business that already charges GST and one that does not. I'm expecting the 10% "download tax" to be applied to all businesses operating online no matter if they charge the GST or not. This is a blanket tax grab.

    Remember, this is brought to us from the Liberal Government, the Government whom wants to tax our income TWICE before it hits our pockets through the already there Income Tax and their newest idea: The Bank Deposit Tax.

      That theory doesn't sound particularly likely.

      To charge a 10% "download tax", they'd need the businesses to provide details of their sales revenue to properly calculate what is owed. But this is the same information that businesses provide to calculate how much GST revenue they need to send to the tax office.

      So it's hard to see how they could implement a separate download tax without also seeing who is and isn't paying GST.

      Yeah they can take that bank deposit tax and shove it right where the sun doesn't shine as well. I'm seriously getting over the LNP. They and anyone who votes for them should go fornicate themselves with an iron spike.

      The change would not affect the price of iTunes downloads. Apple says it already pays GST on every sale in Australia including downloads.

      Gotta be bullshit. I have numerous receipts from iTunes sitting in my gmail account. Receipts which do not include GST, and the tax laws are pretty fucking explicit about the requirement for GST to be included on the receipt.

      They must be using weaselly language when they talk about 'iTunes downloads' to not include in-app purchase, game app purchases, or subscriptions to Pandora. That, or I can send my receipts to the ATO and get them done for receipting non-compliance.

    All Valve need to do at this point is localise our currency in the store. New Zealand has their steam store set to NZD. Not to mention the values are almost identical. So a game that's $69.95 USD in the store here is actually $69.95 NZD in their store. Just a thought.

    Given they can't even get the big boys to pay proper Tax to the Australian government (Apple, Microsoft etc) how do they expect to enforce and monitor this properly?

    How have we not already been.
    Even without our taxes the prices just don't equate.
    Fucking scum bags.

    HOLD UP

    In 2013, the IT Pricing Inquiry found that Australians were indeed being price gouged by IT software prices...
    http://www.gizmodo.com.au/2014/07/the-it-pricing-inquiry-one-year-on-and-nothing-has-changed-for-aussie-geeks/

    Now, the government is considering adding a 10% tax onto these prices they have done nothing about?

    If this happens, the government is knowingly taking a cut in this immoral behavior. The government becomes part of the rip-off!

    I really hope SOMEONE in the media makes this point known...

    Don't look at me, I didn't vote for them.

      There's an ongoing investigation into finding out who did... So far no one has admitted voting Liberal in the last Federal Election.

    Unpopular opinion here, but I think tax on digital goods is fine. The only reason it hasn't been done earlier is because of the difficulty of implementing it.
    Standard response to most taxes is "the world will end because of this".
    When it's introduced people will realise that an extra $5-10 spend every now and then on a hobby of theirs isn't too bad a sacrifice for public schools and hospitals.

      The issue isn't the tax though. It's introduction of a tax on top of an existing price disparity.

      It won't go to schools and hospitals. It will go to collecting the tax. The last few reports modelling the cost of collecting the tax go so far as to claim it will cost MORE to collect than will be raised.

      This doesn't benefit taxpayers at all. Not in the slightest. It ONLY benefits Australian retailers who are hoping that higher international prices will lure Australians to shop locally. That's it.

        Valid point re: cost of collecting the tax being excessive.

        I was more arguing that the basis behind implementing the tax is ok (ie all non- essential goods & services being taxed at 10%).

        I do feel that price gouging by steam is a side argument that shouldn't stop this tax happening (if it can be done efficiently).

        You never know, steam may have to cut back their own "Aussie tax" as a result, meaning we (as Australians) benefit from the increased prices, rather than steam's bank accounts.

    I'll be interested to know how they're actually going to collect it

    Thank you Liberal voting jerks. Back to piracy and imports marked as 'gifts.'

    Slightly off-topic:
    Wanna really raise some revenue? Legalize pot.

      Alternatively: Tax the wealthy more in a way that allows absolutely no loopholes or exceptions. The poor can't afford tax dodges. The wealthy can. This is the single greatest flaw with income tax as it stands.

        Sure, that too. I'm all for people paying their fair share. Extend it to businesses, the rich... anyone who uses fancy legal maneuvering to get out of passing the government. No arguments there.
        If Colorado's experience is anything to go by, legalizing a plant which people are obtaining anyway is win-win. Good for people, good for the police, and especially good for the government's bottom line.
        The only people it isn't good for are the alcohol manufacturers and, well, fuck 'em.

      It is kinda baffling to me that there are people who are convinced there's a "budget emergency", look at the $45-$75 million in tax Colorado collected over the past year (and the fact that their society hasn't collapsed from reefer madness), and still think "Nah mate I don't want any of that." We have close to 5 times as many people as Colorado, so with a similar taxing scheme (although based on how things like cigs and alcohol are taxed here vs the US, the tax would be much, much higher here) we'd be looking at maybe $250 million extra a year at very little extra cost (use the existing infrastructure for taxing/restricting tobacco). That might not seem like that much on a national budget scale, but it's not exactly nothing either.

        Let's not forget the money saved by not locking up and prosecuting criminals associated with the unregulated weed black market.
        The black market would still exist us some form or another but I'd guarantee the average adult toker would much rather go down the local herb shop than wait around for an unreliable and thoroughly sketchy 21 year old.

      Then pot the potheads on a youtuber react type of show called Potheads react.

      Instant $$$

    So will I be paying more for my Netflix sub? Because if they tax Netflix I'm sure they'll pass it on but because I'm getting something under a subscription is that included?

    Good. I hardly -want- to pay more tax,

    But I pay it on almost everything,

    Online sales shouldn't be exempt.

      No one wants to pay tax, but we pay it on everyday things.

      No one would have an issue with the "Netflix Tax" if we weren't already being gouged at 30+% for online purchases as well as the price difference between USD & AUD.

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