Aardvark Daily

Please visit the sponsor!

The tapping of white canes

First of all, my heart-felt apologies to those with impaired vision. Comparing the buffoons in parliament to those with such a disability is wholly unfair but, in this case, necessary.

I'm referring to the news that our political overlords still seem to think that it will be both practical and effective to levy GST on overseas digital purchases.

Sigh!

Talk about being blind to the obvious.

According to this Stuff story, cabinet is about to release a discussion paper on the matter, with a view to moving forward and implementing such a system at some stage in the near future.

Revenue Minister Todd McClay appears to be the master of understatement when he claims "there may be some challenges". Really? Seriously?

That's kind of like saying "reaching the summit of Mt Everest may involve 'some climbing'".

The motivation behind this imperative to introduce what has been dubbed "the Netflix tax" is almost certainly being driven by the governments "mates" over at SkyTV.

For many, many years, SkyTV seems to have dodged the bullets that would normally be fired at a monopoly operator who abused their position by grossly overcharging for the provision of their exclusive service.

How does that work? What has given them special privilege?

I wonder how many MPs have SkyTV shares in their portfolios?

Clearly SkyTV is hurting very badly now that Netflix has ridden into town and is selling a virtual smörgåsbord of video and movie viewing at a tiny fraction the cost of Sky's own repetitive and ad-laden fare. Just about the only thing they can do to try and mitigate the damage to their monopoly is bitch and moan about the inequity of the GST situation.

Well sorry SkyTV, 15% GST on a $12 a month sub still isn't going to close the gap with your astronomical charges and you're dreaming if you think it is.

But more importantly is the fact that our MPs seem completely unaware of just how close to impossible it will be to levy GST on digital imports.

If they choose to *selectively* levy GST on companies such as Netflix then they won't be leveling the playing field at all. All they'll be doing is moving the pieces around.

What's more, any successful strategy for actually levying GST on Netflix subscriptions will almost certainly involve the cooperation of Netflix themselves. The company could voluntarily comply with the government -- but if they choose not to then there's not a damned thing that can be done about it. Netflix isn't an NZ company. Netflix doesn't have to serve up its wares from an NZ-based server. If Netflix says "get stuffed", that's exactly what the government will have to do.

What other strategies could they fall back on in such a situation?

Ban Netflix?

Yeah, that would go down like a lead balloon and, given our proud claims to be in favour of "free trade", it would expose the hypocrisy of this government for all to see because it would represent imposing an unreasonable trade barrier so as to protect local players in the market.

However, let's assume that Netflix plays ball and coughs up GST on its subscriptions... what about all the other companies, large and small, who sell digital wares into NZ over the Net?

iTunes, Amazon and a raft of others would also have to cooperate -- if a level playing field was to be established. And then there are the table-top operators who sell such stuff as software, indie music, ebooks and other digital products directly to Kiwis from locations around the world. How will our naive government levy GST on those sales?

Next up is the issue of people who go on holiday to far-away places. If they download some music, movies, software or whatever to their phones while in the USA, will they be required to pay GST on those purchases when they return to NZ? If not, why not?

It seems to me that we have a government that's still trying to flog a dead horse with a buggy-whip made in the 1800s.

As far as the Net is concerned, we live in a borderless environment. Digital data knows no geographical constraints and it flows like water through a sieve, no matter how hard you try to stop it.

Perhaps it's time the government took the proactive step of exempting digital media from GST -- and thus solving the problem. I fear however, that they will bumble ahead, and spend the next five years trying to nail jelly to a tree -- before they finally realise the futility of their actions.

Please visit the sponsor!

Have your say in the Aardvark Forums.

PERMALINK to this column

Rank This Aardvark Page

Change Font