It’s not enough that every critter in Australia wants you dead, but now the Australian government wants to bankrupt you for daring to use overseas digital services. Dubbed the “Netflix Tax,” a 10% GST (general sales tax) will be added on top of any digital purchase an Australian resident does, from books to movies to video games. Starting on June 1, this tax is supposed to generate $350 million over the course of four years. The Netflix Tax comes on top of already ridiculous prices for Australian customers: a Steam game can cost up to twice as much in Australia than in the rest of the world.
Though there is already a GST for online overseas purchases over $1,000, this new law would include absolutely all purchases, even video game micro-transactions. This initiative is motivated to a large degree by the Australian movie industry, which is failing to attract a domestic audience by producing interesting, high budget, global content. Instead of ramping up the quality, said industry lobbied the government to introduce the tax.
But therein lies the problem: collecting minute tax amounts always costs more than the revenue generated. So how can the Australian government enforce the collection of the Netflix Tax and profit off of it?
The solution is to have big companies, such as Google, Amazon and Netflix, become tax collectors for the Australian government. The companies would increase the price on their goods and services and then remit the 10% back to Australia. Of course, this can only work if all companies are on board with the plan, which means that if only one company refuses, it will a have a massive advantage over the competition.
It’s ironic that the same big companies that found legal ways to avoid paying enormous amounts in taxes will be tasked with collecting taxes from the end customer. We can expect only hilariously disastrous results from the Netflix Tax. But, in the end, that’s what happens when people who have no idea how technology functions want to regulate it.