On the eve of the 2015 Federal Budget, Federal Treasurer Joe Hockey has confirmed that Australia will get a new "Netflix Tax" on digital services.
The so-called "Netflix Tax" isn't a brand new levy for online services. Instead, Treasurer Hockey said at a press conference this afternoon that the Federal Government would charge the 10 per cent Goods and Services Tax on top of these digital services.
It's unclear which services will have the GST applied to them, but it could encompass everything from Netflix right through to services like Uber rides and Steam games.
According to Hockey, this GST extension wouldn't apply to products that cost under $1000 imported into Australia. That's because the Treasurer agrees with a 2009 Productivity Commission report which said that would cost more to enforce than it would make in tax revenue. Hockey said in a press conference that the Government would go to tech companies and ask them to hike their prices by 10 per cent and send that extra revenue to the Government in the form of a tax.
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.
Hockey flagged that the extension of the GST onto digital service would raise $350 million over four years. That revenue will be given straight to the states.
Draft legislation will be tabled before the House tomorrow night during the unveiling of the Federal Budget.
We're reaching out to the Opposition for comment on whether or not it would pass such a Bill.