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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







































































Item

Price before

29 July 1999



$
Price Reduction

Lower Range

(5% decrease)

$
Price Reduction

Higher Range

(7% decrease)

$
New Price

Lower Range



$
New Price

Higher Range



$

Medium range colour TV

599 30 42 557 569

Higher end stereo

1799 90 126 1673 1709

Video player

349 17 24 325 332

Lower end camera

89 4 6 83 85

Higher end colour TV

1399 70 98 1301 1329

CD player

299 15 21 278 284

Higher end camera

999 50 70 929 949

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
.

Background


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


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