The Australian Competition and Consumer Commission will take action under new, expanded powers against any business that increases its prices now in anticipation of the start of the New Tax System on 1 July 2000, Chairman, Professor Allan Fels, warned today.
"In addition to the Commission's post 1 July 2000 powers, we will now take action in respect of any unreasonable price rises before the GST takes effect.
"Already the ACCC has received a number of complaints from consumers that some businesses are taking the opportunity to increase their prices now, in anticipation of the start of the GST," Professor Fels said.
"But the ACCC guidelines on price exploitation state that prices should reflect actual, not anticipated, tax increases.
"The ACCC will ensure that consumers are not 'ripped off' during the change to the New Tax System.
"We are working with business to ensure it understands its responsibilities on price changes. The ACCC has issued a simple, plain language Pricing Guidelines booklet to inform business of its responsibilities.
"The ACCC expects that business should pass on the full effect of any reductions in Wholesale Sales Tax and other indirect taxes flowing from the introduction of the New Tax System. Any price increased related to implementation of the GST should include the full offset effect of these reductions in indirect taxes."
Professor Fels said all prices should reflect only actual, not anticipated tax increases.
"Any business that raises its prices now to exploit the GST will be investigated," he said.
"The ACCC has launched national price monitoring of supermarket and pharmacy prices to ensure that tax savings are passed on in full to consumers.
"Major chains and retail associations have been notified that ACCC monitoring is starting and seeking their cooperation.
"Around three million prices will be collected during the transition period to provide the ACCC with information to identify businesses that may breach the Trade Practices Act 1974 prohibition on price exploitation," Professor Fels said.
"In addition, monthly surveys of grocery prices are being undertaken at hundreds of retail outlets.
"When the GST is introduced on 1 July 2000 there will be price falls as well as price rises. With the removal of indirect taxes on many goods, many prices will rise by less than 10 per cent.
"Consumers should know that if costs to business fall then prices should fall by at least the same dollar amount.
"Business will quickly learn that there are 19 million consumers joining forces with the ACCC to rein in those breaking the law.
"The legislation does not prevent businesses from adjusting prices to reflect the New Tax System changes. However, it does seek to prevent over-recovery of tax changes either from raising prices too high or not reducing prices sufficiently.
An ACCC Price Hotline (1300 302 502) lets consumers and businesses alert the ACCC about any unjustified price increases - or simply to seek more information about the law prohibiting price exploitation.
"Companies found to be engaging in price exploitation face penalties of up to $10 million for corporations and $500,000 for individuals.
"The level of penalties reflects the Government's concern to ensure that no business takes unfair advantage of the New Tax System changes.
"In addition to the Commission's post 1 July 2000 powers, we will now take action in respect of any unreasonable price rises before the GST takes effect.
"Already the ACCC has received a number of complaints from consumers that some businesses are taking the opportunity to increase their prices now, in anticipation of the start of the GST," Professor Fels said.
"But the ACCC guidelines on price exploitation state that prices should reflect actual, not anticipated, tax increases.
"The ACCC will ensure that consumers are not 'ripped off' during the change to the New Tax System.
"We are working with business to ensure it understands its responsibilities on price changes. The ACCC has issued a simple, plain language Pricing Guidelines booklet to inform business of its responsibilities.
"The ACCC expects that business should pass on the full effect of any reductions in Wholesale Sales Tax and other indirect taxes flowing from the introduction of the New Tax System. Any price increased related to implementation of the GST should include the full offset effect of these reductions in indirect taxes."
Professor Fels said all prices should reflect only actual, not anticipated tax increases.
"Any business that raises its prices now to exploit the GST will be investigated," he said.
"The ACCC has launched national price monitoring of supermarket and pharmacy prices to ensure that tax savings are passed on in full to consumers.
"Major chains and retail associations have been notified that ACCC monitoring is starting and seeking their cooperation.
"Around three million prices will be collected during the transition period to provide the ACCC with information to identify businesses that may breach the Trade Practices Act 1974 prohibition on price exploitation," Professor Fels said.
"In addition, monthly surveys of grocery prices are being undertaken at hundreds of retail outlets.
"When the GST is introduced on 1 July 2000 there will be price falls as well as price rises. With the removal of indirect taxes on many goods, many prices will rise by less than 10 per cent.
"Consumers should know that if costs to business fall then prices should fall by at least the same dollar amount.
"Business will quickly learn that there are 19 million consumers joining forces with the ACCC to rein in those breaking the law.
"The legislation does not prevent businesses from adjusting prices to reflect the New Tax System changes. However, it does seek to prevent over-recovery of tax changes either from raising prices too high or not reducing prices sufficiently.
An ACCC Price Hotline (1300 302 502) lets consumers and businesses alert the ACCC about any unjustified price increases - or simply to seek more information about the law prohibiting price exploitation.
"Companies found to be engaging in price exploitation face penalties of up to $10 million for corporations and $500,000 for individuals.
"The level of penalties reflects the Government's concern to ensure that no business takes unfair advantage of the New Tax System changes.