Australia: Your digital games will get more expensive

We did warn you: Australians really are about to start paying more for digital services – including Steam games – as Federal Treasurer Joe Hockey has confirmed plans to introduce a “Netflix tax” in this week’s Federal Budget.

Better start saving for your next game!

Better start saving for your next game!

As mentioned last week, this is not a new tax, but an extension of Australia’s current Goods and Services Tax to include digital services, adding 10% to virtual items and services purchased online. Details have not yet been revealed, but potential services include not only Steam games but also Netflix subscriptions and even Uber trips.

The GST digital extension is estimated to raise more than AU$350 million over four years – and, like regular GST revenue, will be distributed among the Australian states and territories.

Draft legislation will be tabled before the House of Representatives tomorrow (Tuesday) night during the Federal Budget presentation. The Federal Opposition does have the ability to refuse the tax reform – but the Labor party’s opinion on the deal is unclear at this stage.

Treasurer Hockey has explained in a pre-Budget presentation that he’s adhering to the 2009 Productivity Commission report that pointed out the price of enforcing the GST extension to products imported into Australia that cost less than AU$1000 would be more than the potential tax revenue.

Instead, the Liberal Government will approach tech companies (including potentially Valve, Netflix and Uber) to ask them to raise their prices by 10%. According to the Treasurer, tech companies he’s spoken to are “agreeable” to the change – as it’s “not their profits” being eaten into.

It’s worth pointing out at this point that Apple reportedly already charges a GST equivalent on all iTunes/App Store purchases, so those prices should remain steady.

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