The federal government’s announcement of GST imposition on digital goods has been dubbed the “Netflix Tax”, but Netflix would, if anything, come off pretty lightly if it’s implemented.
As covered just about anywhere — blatant self-plug, here’s my version at PC Mag Australia — part of last night’s Federal Budget included the introduction from July 1st 2017 of a GST — presumably 10 per cent — on digital goods and services purchased by Australians from overseas providers.
There’s a few easy caveats to bear in mind there. The government has to get it past the senate, for a start, and that’s presuming all sorts of other factors such as a now-mooted early election don’t happen.
Then there’s the question of how, exactly, the government plans to enforce GST collection on companies with no Australian taxation base. That’s still remarkably unclear as well, although for larger entities such as Netflix it’s probably a little simpler to track down the responsible people than it would be for a smaller service.
But still, let’s say for the moment that the bill passes and Netflix goes along with it for whatever reason. It’s been welcomed, for example, by Foxtel, as a way to introduce a “level field” for consumers.
So let’s take a look at Netflix’s pricing regime as it stands.
Right now the single stream SD service runs to $8.99 per month, the two stream HD service is $11.99 per month and the four stream Ultra HD service — which on average Australian Netflix speeds, many customers wouldn’t be able to use anyway — is $14.99 per month.
Whack on ten per cent, and maybe a little more to deal with the administrivia of actually collecting and sending the cash the government’s way, and you’re looking at price ranges of roughly $10, $13.50 and $16.75 or so for each plan.
Which is, on the face of it, still very competitive with the offerings from Stan, Presto, Foxtel and whatever’s left of Quickflix by July 1st 2017. I’ve already had some comments thrown my way via social media that people are planning to “return to torrenting”, but frankly, if your excuse is in the range of 90c or so, you’re skating on very thin justification grounds.
Equally, that’s presuming that Netflix doesn’t take a look at the books and simply decide to absorb the GST cost itself, which is also feasible depending on how much they want to maintain that low price competitive edge in Australia.
Realistically, it’s not Netflix where Aussie consumers will feel the GST pinch if it can be enforced at all. Its more ad-hoc digital purchases of higher price, such as Steam games.
We’re already hit with higher prices for a lot of games via Steam, and the prospect of paying $66 rather than $60, or $99 rather than $90 is a lot more concerning than a few cents extra on a Netflix subscription. The world is shifting to a model of heavy digital distribution for all sorts of material, and much of it will cost a great deal more than a Netflix subscription without added GST already.