GST will be imposed on internet downloads from overseas providers under the so-called Netflix tax, next week’s budget papers are expected to reveal.
The assistant treasurer, Josh Frydenberg, has been a long-time proponent of charging GST on films, music, books and video games downloaded from overseas providers, saying the measure “provides a level playing field” for domestic providers who are charged GST.
“This is an area that we’ve been working with international partners on, trying to get a good understanding of where Australia’s tax system should be for the future,” Frydenberg told ABC TV on Thursday.
“We have a growing digital and e-commerce world and the tax system needs to stay up with that game, because if we don’t, the taxpayer will be shortchanged and that won’t be a good outcome for either consumers or for taxpayers.”
Tony Abbott would not be drawn on the details of the tax. He told 3AW radio on Thursday: “There are a number of these internet-based online businesses like iTunes which are paying GST in Australia. There are some, I understand, which aren’t paying GST in Australia. We will have more to say about that on budget night.”
State and territory treasurers pledged their in-principle support for the integrity measures when they met the federal treasurer, Joe Hockey, in Canberra last month.
The opposition leader, Bill Shorten, said that Labor would consider the GST proposal.
A 2012 review into GST by the former NSW premier Nick Greiner and former Victorian premier John Brumby estimated that in 2010-11 the government lost $1bn in revenue by not charging the tax on intangibles. The number of downloads from overseas providers has skyrocketed since then.
The government also wants to apply GST to online goods and services worth less than $1,000, although consumer groups have warned that websites might also add a fee to cover processing costs.
Shorten said lowering the threshold should be considered only if revenue exceeded the cost of setting up the new system.
“If you are going to bring in a new tax which goes to peoples’ cost of living and it costs more to collect than raise, it sort of defeats the purpose,” Shorten told ABC Radio on Monday.
