Price reductions expected tomorrow

The Wholesale Sales Tax on televisions, videos, stereos, cameras, watches and certain other goods will fall from tomorrow (29 July 1999).

"These reductions should be passed on fully and immediately in prices by businesses selling or supplying these goods", Australian Competition and Consumer Commission Chairman, Professor Allan Fels, said today.

"For example, if the Wholesale Sales Tax reduction is $40 then both the wholesale and retail prices should drop by $40.

"The WST rate will fall from 32 per cent to 22 per cent. The percentage impact on retail prices will vary depending on what proportion the wholesale price is of the retail price," he said.

Refunds are available from the Australian Taxation Office for retailers who have already paid the higher rate of WST on their stock on hand. Businesses should therefore reduce prices tomorrow (29 July) so that their customers get the benefit of this tax reduction immediately.

Some indicative examples of expected price reductions are:

INDICATIVE PRICE REDUCTIONS

Note: These prices are only indicative. Consumers may be able to negotiate a lower price with the business.

"The ACCC's role is to monitor prices and make sure that the reduction in WST is passed on in full to the consumer. Where it believes this is not happening it will investigate.

"Not passing on the tax reduction risks breaching the Trade Practices Act and can attract penalties of up to $10 million per offence for companies and of up to $500,000 per offence for individuals," Professor Fels said.

"The ACCC is monitoring price movements to ensure the tax reductions are passed through to consumers.

"The ACCC has already completed a comprehensive Australia-wide survey of prices of goods subject to the drop in WST. It is about to commence a further survey of these outlets to evaluate the impact of the tax changes on prices to consumers," Professor Fels said.

What to do if prices don't fall?

The first step is to ask the retailer why the price has not fallen on the relevant goods.

If you aren't satisfied with the retailer's explanation you can contact the ACCC Price Hotline on 1300 302 502.

• for the cost of a local call from anywhere in Australia you can speak directly to an ACCC officer who will record your complaint and offer advice.
• the Hotline will be open from 8.30 a.m. - 5.30 p.m. EST Monday to Friday.

Where to go for more information?

If you need more information about price exploitation in relation to the New Tax System (and the GST), you can find it on:

• the ACCC website: or
• the ACCC Price Hotline: 1300 302 502.

General inquiries relating to the New Tax System (and the GST) should be directed to the Australian Tax Office on the WST Rate Reduction Infoline: 1800 634 905.

On 14 July, the ACCC issued Guidelines to explain the operation of the new price exploitation provisions of the Trade Practices Act 1974 that now apply to all businesses. Part VB of the Act prohibits price exploitation from the New Tax System changes either from raising prices too high or not reducing them enough. The Guidelines state that prices should be reduced immediately to pass on the full effect of the tax reductions.

The goods subject to the tax falls include:

• tape recorders video recorders radios
• televisions stereo players watches and clocks
• cameras video cameras binoculars
• and parts for many of these goods.

It also includes slot machines operated by coins or tokens, studs, tie pins and cuff links; precious metal goods and plated ware

The ACCC has launched its comprehensive surveillance and information strategy for the price exploitation elements of the New Tax System. It includes:

• a citizen's hotline number - 1300 302 502 at local call cost to report possible price exploitation. First calls have already been received on this line;
• monitoring for the reduction in WST in cities and towns across the nation;
• issuing Guidelines on Price Exploitation - a guide to inform business on when the ACCC will regard price exploitation to have occurred;
• a plain-English News for Business on misleading pricing claims;
• two consumer bulletins: the first on what to expect in price reductions under the WST change from 29 July 1999; and the second on what New Tax System changes occur when;
• acting against those attempting to rip-off consumers and business through scams and other illegal activities during the transition;
• building its national GST staff base; and
• frequently updated information on the ACCC's website: http:www.accc.gov.au

"The New Tax System will make a number of changes to the existing taxation system for businesses and individuals. The WST reduction is one of the early changes," he said.

What are those changes and when do they come into effect is a common question being asked of the ACCC on its national hotline (1300 302 502). The major changes and their timing are:

• 29 July 1999 the Wholesale Sales Tax (WST) on many products with a WST rate of 32 per cent reduces to 22 per cent
• 1 Nov. 1999 changes to excise on cigarettes
• 1 July 2000 introduction of the GST
• abolition of WST
• changes to excise on petrol and diesel and to the Diesel Fuel Rebate Scheme
• changes to excise on alcoholic beverages (including in introduction of the 'Wine Equalisation Tax')
• introduction of a 'Luxury Car Tax'
• abolition of bed taxes