Kill the Australia tax: commission

The Productivity Commission has put companies like Adobe and Apple on notice in a recent report on the future of the Australian retail sector, warning international companies that over-charge Aussies for software and other digitally distributed content that they are being monitored.

In its draft report released yesterday, the Productivity Commission said that the internet continues to change the retail landscape by allowing businesses to distribute products digitally via outlets like Apple's App Store.

The Productivity Commission said that companies, which think they can get away with charging higher prices for overseas customers, are walking a very fine line.

"The commission is aware of the long-standing practice by which some international suppliers set differential regional prices. This effectively treats consumers in one region as willing, or able, to tolerate significantly higher prices than those in other countries," the Productivity Commission said in its report.

"Some international suppliers have attempted to defend such price discrimination as due to the cost of supplying a remote and relatively small market like Australia, which in some cases has its own unique requirements. These arguments in most cases are not persuasive, especially in the case of downloaded music, software and videos, for example, where the costs of delivery to the customer are practically zero and uniform around the world," the report added.

Apple, for example, was, until recently, lambasted by Australian consumers for charging more for digitally distributed software, music and movies than it did for identical products in the US.

Apple responded recently by adjusting the price of its iPhone and iPad apps down to reflect the high Australian dollar against the US currency.

Other offenders are still slugging Aussies with a premium, however, including Adobe, which still charges Australian's $500 more for the privilege of buying the Adobe CS5 Creative Suite locally.

The Productivity Commission said that such behaviour is hurting local retailers.

"Addressing such regional price discrimination is one of the main challenges for local retailers. If retailers fail to purchase the goods that they resell at competitive prices, more business exits and loss of employment will occur," it said in its report.

The commission has said that Australian bricks and mortar retailers shouldn't take it lying down, pushing for them to beef up their online presence and fight back.

"The task for government, however, is not to pick retail winners. Rather, it is to help ensure that bricks and mortar and online Australian retailers can respond effectively to the increasingly global retail marketplace, by not unduly constraining their ability to adapt their business models in response to changing consumer preferences," the Productivity Commission said.

The Productivity Commission's report also suggested that the government lower the threshold on GST-free purchases being imported back into Australia.

The report is open for comment until 2 September.