Netflix has increased prices for Australia, over and above the amount required for next week’s start of compulsory GST on digital content.
The streaming giant’s Australian website this morning showed the following prices:
- Basic plan: $9.99 per month (up $1 or 11%)
- Standard plan: $13.99 (up $2 or 17%)
- Premium plan: $17.99 (up $3 or 20%)
This means that while 10% of the price rise will go towards GST, any excess is for the enjoyment of Netflix.
The so-called “Netflix tax” comes into effect fully on Monday. It was introduced in the 2015 budget by then treasurer Joe Hockey, who said it would “level the playing field for Australian businesses”.
A briefing paper on the legislation says:
“This change will result in supplies of digital products, such as streaming or downloading of movies, music, apps, games, e-books as well as other services such as consultancy and professional services receiving similar GST treatment whether they are supplied by a local or foreign supplier.”
Business Insider compared the new Netflix prices to the plans offered in the US, which after currency conversion works to be about the same for the cheaper tiers — $10.54 for basic and $13.18 for standard. The top premium plan, which includes 4K definition streaming, works out to be at $15.82, a bit cheaper for Americans.
The entertainment service did trial a price rise last month, in the same increments as the permanent changes applied today. A company spokesperson said at the time not everyone saw the trial prices and they may not ever be applied generally.
This time, with the price hikes set in stone for all subscribers, Netflix Australia defended the move on the basis of its new content and its new GST obligations.
“From time to time, Netflix plans and pricing are adjusted as we add more exclusive TV shows and movies, introduce new product features and improve the overall Netflix experience to help members find something great to watch even faster,” a company spokesperson said.
The spokesperson also pointed out that prices had not changed since its 2015 launch in Australia. It’s understood the changes affect anyone signing up from today, while existing subscribers will be given a 30-day notice from Thursday — although the SMH reported that US subscribers in the past had been given as long as 24 months after “a backlash”.
According to USA Today, last year’s $US2 price hike in the US saw subscribers depart in protest.
Other countries are also considering or implementing a digital consumption tax, with New Zealand already charging a 15% levy, Pennsylvania mulling over a 6% sales tax last year and Chicago currently defending its 9% amusement tax through the courts.