The Australian Federal budget was released last week and within it came an array of alterations and surprises. Whilst the majority of people may have been fixated on the details surrounding childcare reform and small business tax breaks, they may have missed a couple of things. The first that you probably didn’t hear about was the government’s intention to request a 0.75 cents levy per kilogram of bananas.
Besides trying to cash in on the worlds most popular fruit, it also announced its intentions on cashing in on the worlds most popular streaming service, Netflix. Netflix recently hit our Australian shores and regardless of its mixed reviews you’ve guessed it, its now getting its own “Netflix Tax.” This in my eyes only encourages more people stream illegally, plus combined with tediously slow bandwidth issues across parts of Australia, this could also potentially lead to Netflix losing considerable amounts of business. The knock on effect of which could see the variety of content being trimmed back for Australians viewers, as Netflix won't have the budgets necessary to keep on updating with new shows, films, documentaries etc.
The Netflix tax sounds like a cool thing for politicians within Abbots government to throw around, yet for the average Australian user it only means bad news for their wallet. Essentially this tax is basically the government applying its 10% Goods and Services Tax onto the streaming giant's digital products. The buck doesn’t stop there though, as the Netflix tax is also being applied across a broader range of digital products and services which we the customers receive from abroad.
So what exactly is being taxed I here, you may be asking? Well, pretty much everything you can download on a tablet, smartphone or e-book reader such as; music, movies, digital magazines and streaming services. You can expect to see your digital products all become more expensive over time. But don't panic just yet as this price jump will not happen right away. However, when the prices do increase you can expect to see your basic Netflix package increase to $9.90, the standard package to $13.20 and the premium package to jump up to $16.50.
Why are they Doing this?
The government believe that they need to level the playing field for Australian companies because currently they are unable to compete on the international stage. This ties in with my recent post about online retailers pestering the government to reduce the import tariff from $1,000 to less because they're also unable to compete with overseas competition. I’m all for protecting Australian industry, but to protect them and keep prices inflated as they are now, only continues to make us worse off.
Joe Hockey in his response to these common woes mentioned within the budget:
“It is unfair that overseas based businesses selling services into Australia may not charge GST when local businesses have to charge GST.”
“A local business that employs Australians, pays rent in Australia, pays tax in Australia, and helps build our economy is disadvantaged by the current system.”
Although these changes have been put in motion, the expected delivery date of tax on digital products is that it will commence from 1st July 2017. This is assuming that the required legislation is approved.
The Streaming Failure
Besides the Netflix tax, Australian broadband infrastructure is also providing customers with streaming difficulties. Australians who threw themselves into Netflix when it first landed, which was potentially their first online streaming service, may have been very disappointed. This was likely down to many customer's inabilities to stream the gigabytes of high-definition content they believed they were signing up to.
We are now roughly a month on from the launch of Netflix in Australia and within the first few weeks there were complaints across the internet from users who were experiencing slow internet speeds, especially during prime viewing hours of between 6pm to 11pm.
This is a direct result of poorly developed ISP’s (Internet Service Provider) infrastructure, something we have seen coming from a mile away. The only thing we as customers can hope for is that investment picks up within the telecommunications industry to improve our ageing and cumbersome network.
Netflix has done some good in the sense that it has given Australians across the country a cheaper alternative to online streaming, if you compare services like Foxtel and Presto. The variety of content is also a refreshing change compared to other Australian services, but the overall verdict a month or so in is not overly impressive. Until the streaming services negotiate better content deals for the Australian territories and Internet infrastructure improves we are in for a good few years of channel flicking and choking, spluttering streaming services.