Australia Tax is a phrase applied to the generally higher prices of goods and services than equivalent costs in comparative overseas nations such as the United States of America. This is particularly the case for video games, computer hardware, and software but may extend to non-technological items such as cars, designer clothing and banking services. Companies selling non-physical products which are not subject to the rent and labour of a traditional retail outlet have been particularly criticised. Some prices differences can be as much as 88% more expensive.
The phrase was first used by Ed Husic a federal member of parliament who brought the issue up in the chamber and subsequently advocated for an inquiry into the problem. The cost of digital goods was the subject of an inquiry by the Australian government in 2013.
The cost of Adobe Systems' Creative Suite 6 Master Collection in Australia was much higher than that of the United States equivalent, retailing at AU$4,334 in comparison to $2,599 in the United States. It was calculated at the time that it was cheaper to fly to the United States, purchase a copy of the software, and fly back to Australia. In May 2013, the Adobe Creative Cloud service was launched, offering access to the Creative Suite software on a subscription basis. Australian prices initially were set to AU$62.99 per annum in comparison to the United States price of $49.99 per annum, but following an inquiry by the Australian government into regional pricing of digitally distributed good, Adobe Systems adjusted the Australian price to match that of the United States.
Microsoft was criticised by a report released by the Australian Standing Committee on Infrastructure and Communications titled "At what cost? IT pricing and the Australia tax." The report acknowledged that there were some contributing factors specific to the Australian market which can make it a higher-cost environment for IT vendors compared with other markets, such as Australia's small population and geographical distribution, however the inquiry did not find that these factors were substantial enough to defend the price increases of products such as Microsoft Office, especially if the product is delivered via the Internet.
IT pricing inquiry
In 2012, the House of Representatives Standing Committee on Infrastructure and Communication began a 12-month investigation into price differences for IT products. The report into the matter titled At What Cost? concluded that IT products are more expensive in Australia because of "regional pricing strategies implemented by major vendors and copyright holders". 10 recommendations were made including the removal of geo-blocking restrictions and lifting restrictions on parallel importing. An amendment to the Competition and Consumer Act which would make contracts or terms of service which seek to enforce geo-blocking to become void was suggested as was the education of the Australian public on ways to circumvent geo-blocking mechanisms. The recommendations were supported by the Australian consumer rights organisation Choice.
- Serrels, Mark (11 Nov 2010). "Why Do Videogames Cost So Much In Australia?". Kotaku. Kotaku. Retrieved 5 Sep 2014.
- Hopewell, Luke (2012-05-24). "Australia tax inquiry opens submissions". www.zdnet.com.au. Retrieved 2012-06-21.
- "Apple, Microsoft grilled over Australian prices". ABC News. ABC News. 23 Mar 2013. Retrieved 5 Sep 2014.
- Wenlei Ma (6 September 2014). "Shopping could get cheaper in Australia". www.news.com.au (News Limited). Retrieved 6 September 2014.
- Rebecca Nash (12 April 2013). "IT pricing inquiry fails to impress". ABC News (Australian Broadcasting Corporation). Retrieved 15 September 2014.
- Paul Smith (29 July 2014). "Online piracy fuelled by ‘Australia Tax’ price gouging". Australian Financial Review (Fairfax Media Publications). Retrieved 15 September 2014.
- "Inquiry into IT Pricing". Parliament of Australia. Commonwealth of Australia. 29 July 2013. Retrieved 5 September 2014.
- "It is cheaper to fly to US than buy Adobe software in Australia". www.news.com.au. www.news.com.au. February 13, 2013. Retrieved September 5, 2014.
- Hopewell, Luke (13 February 2013). "Don't Believe The Adobe Price Cut Hype, It's Still Gouging You Silly". Gizmodo. Gizmodo. Retrieved 5 September 2014.
- At what cost? IT pricing and the Australia tax, Chapter 3, Paragraph 116 "At what cost? IT pricing and the Australia tax". Parliament of Australia. Commonwealth of Australia. 29 July 2013. Retrieved 5 September 2014.
- At what cost? IT pricing and the Australia tax, Chapter 3, Paragraph 117 "At what cost? IT pricing and the Australia tax". Parliament of Australia. Commonwealth of Australia. 29 July 2013. Retrieved 5 September 2014.
- Michelle Starr (29 July 2013). "IT pricing inquiry verdict: Australia is consistently ripped off". CNET (CBS Interactive). Retrieved 15 September 2014.
- Madison Cartwright (29 July 2013). "Death to the Australia Tax?". CHOICE. Retrieved 15 September 2014.