The war over charging the GST on overseas purchases under $1000 seems to have reached a cease-fire stage once again, with the Government reportedly dropping plans for its "Netflix Tax" ahead of next week's Federal Budget.
The Netflix Tax is the fresh new name given to the plan to tax online purchases under $1000 on their way into Australia. Right now, the Government doesn't collect Goods and Services Tax revenue on purchases made overseas from sites like Amazon and ASOS.
A few years ago, Gerry Harvey and a band of merry retailers pushed for the Government to crack-down on the GST-free threshold, forcing debate into the mainstream over whether local businesses were losing out to cheaper online competitors from overseas. The Productivity Commission researched a plan to charge the GST on purchases under $1000 imported into Australia back in 2009 and found it would cost about as much to implement as it would garner in revenue, rendering the plan largely useless.
It had been rumoured that the Government would not only resurrect the plan to collect the GST on overseas purchases, but encompass other online services out of the US including Uber, iTunes, Google Play and Netflix, hence the creative name "The Netflix Tax".
The plan is reportedly dead in the water ahead of the upcoming Federal Budget, however, with News Limited reporting that the plan has been rejected by senior Cabinet ministers. According to the report, a Netflix Tax would be seen as anti-consumer. [News]