In Federal Parliament this week Treasurer Joe Hockey took aim at multinational retailers who have been cashing in on the ‘Australia tax’.

The ‘Australia Tax’ is a term coined to describe the added excise put on products and services for Australian consumers. There is no reason for it. And so it was deemed a mark-up simply for the privilege of living in Australia.

Clothes, digital downloads, and cosmetics are the major culprits. Multi-national vendors pay little domestic tax and yet reap the benefits of being able to charge Australians as though they do.

Mr. Hockey said in Parliament, “Australian consumers pay much higher prices compared to U.S. customers when purchasing IT hardware, software, music, games, sporting equipment and fashion. And some companies selling these products pay little tax in Australia, despite their products selling for much higher prices in Australia than elsewhere.”

Mr. Hockey has authorised the Australian Tax Office to inquire into the pricing practices of these companies; and to do so ‘vigorously’. The result could be cheaper prices for goods for all Australians.

Consumer group choice famously pointed out that it would be cheaper to fly to America, buy a certain piece of Adobe software and fly home, than to buy it from Australia. The Apple iTunes Australian store has music priced 90 cents higher per single here than in America. And yet there is no warehousing, transportation, taxes or other costs to the company to support this higher price.

Tom Godfrey.

Tom Godfrey.

Tom Godfrey, head of media at Choice said, “There’s no excuse for tech giants charging Australians more for digital products. During the IT pricing inquiry, they suggested GST causes for slapping on an ‘Australia Tax’ but as they are paying so little tax it’s clearly another baseless excuse for price gouging.”

Choice estimates Australian consumers pay 33 per cents more than U.S. buyers for top 10 movie releases from Apple iTunes and 26 per cent more for PlayStation 4 video games.

“It’s time to end digital discrimination and call the tech giants to account for the ‘Australia Tax.’

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