Key industry and consumer groups have provided positive input to the Australian Competition and Consumer Commission's guidelines on how it will judge when New Tax System price exploitation had occurred.
At a GST forum in Canberra yesterday, ACCC Chairman Professor Allan Fels outlined progress on monitoring prices to ensure that the benefits of tax reforms are passed to consumers and the prohibition on price exploitation is effective.
"On 29 July the rate of wholesale sales tax on some goods was reduced from 32 per cent to 22 per cent", he said.
"Our national survey shows almost all businesses toed the line with the ACCC's pricing guidelines and passed on the rate cut to consumers.
"The ACCC continues to work with business to ensure that the principles established in the pricing guidelines are clearly understandable, realistic and attainable.
"Whilst the ACCC has not experienced the full impact of its new responsibilities, because the GST does not start until 1 July 2000, the past six months have laid the foundations for a smooth transition to the New Tax System.
"The WST change on 29 July 1999 and the tobacco excise change on November 1 1999 allowed the ACCC to develop and test systems, ready for the larger changes of 1 July 2000.
"The guidelines are an important tool to industry because they represent the ACCC's opinion on what price changes will constitute price exploitation".
Professor Fels said that the principles of the current guidelines apply economy-wide and any change in price based on the GST should include a full offset for other indirect tax cuts.
"There should be no mark-up on GST. Prices should reflect actual, not anticipated, tax rises. Businesses should not take the opportunity to increase the difference between cost and prices in dollar terms.
"The ACCC's strategy for informing businesses and consumers, underpinned by its price monitoring activities, will focus on education and awareness for business and consumers.
"All businesses must look to achieve the potential savings that may be available as a result of tax reform.
"With this in mind, the ACCC will approach its work on the basis that there may be uncertainty, especially for small business, and that most companies are not deliberately out to 'rip off' consumers.
"Further development of the guidelines, which will take into account amendments currently before Parliament, will deal with those engaging in anticipatory price exploitation. The ACCC aims to ensure that by 1 July 2000 businesses will be fully aware of their responsibilities. They will have simple, easily understood principles to ensure that the benefits of tax reform are delivered to consumers without hampering business activity".
Professor Fels warned businesses tempted to engage in price exploitation that they faced penalties of up to $10 million for corporations and $500 000 for individuals.
More information about the ACCC's role in respect of the New Tax System can be found on the ACCC's website at www.accc.gov.au or by calling the ACCC Price Hotline on 1300 302 502 for the cost of a local call.
At a GST forum in Canberra yesterday, ACCC Chairman Professor Allan Fels outlined progress on monitoring prices to ensure that the benefits of tax reforms are passed to consumers and the prohibition on price exploitation is effective.
"On 29 July the rate of wholesale sales tax on some goods was reduced from 32 per cent to 22 per cent", he said.
"Our national survey shows almost all businesses toed the line with the ACCC's pricing guidelines and passed on the rate cut to consumers.
"The ACCC continues to work with business to ensure that the principles established in the pricing guidelines are clearly understandable, realistic and attainable.
"Whilst the ACCC has not experienced the full impact of its new responsibilities, because the GST does not start until 1 July 2000, the past six months have laid the foundations for a smooth transition to the New Tax System.
"The WST change on 29 July 1999 and the tobacco excise change on November 1 1999 allowed the ACCC to develop and test systems, ready for the larger changes of 1 July 2000.
"The guidelines are an important tool to industry because they represent the ACCC's opinion on what price changes will constitute price exploitation".
Professor Fels said that the principles of the current guidelines apply economy-wide and any change in price based on the GST should include a full offset for other indirect tax cuts.
"There should be no mark-up on GST. Prices should reflect actual, not anticipated, tax rises. Businesses should not take the opportunity to increase the difference between cost and prices in dollar terms.
"The ACCC's strategy for informing businesses and consumers, underpinned by its price monitoring activities, will focus on education and awareness for business and consumers.
"All businesses must look to achieve the potential savings that may be available as a result of tax reform.
"With this in mind, the ACCC will approach its work on the basis that there may be uncertainty, especially for small business, and that most companies are not deliberately out to 'rip off' consumers.
"Further development of the guidelines, which will take into account amendments currently before Parliament, will deal with those engaging in anticipatory price exploitation. The ACCC aims to ensure that by 1 July 2000 businesses will be fully aware of their responsibilities. They will have simple, easily understood principles to ensure that the benefits of tax reform are delivered to consumers without hampering business activity".
Professor Fels warned businesses tempted to engage in price exploitation that they faced penalties of up to $10 million for corporations and $500 000 for individuals.
More information about the ACCC's role in respect of the New Tax System can be found on the ACCC's website at www.accc.gov.au or by calling the ACCC Price Hotline on 1300 302 502 for the cost of a local call.