Posted November 10, 2018 06:15:51 Australian consumers can expect to pay much more for diapers in 2019, as a new tax law is introduced that will see a 25 per cent tax on diaper sales.
The change is expected to take effect from January 1.
The tax on diapers is expected be announced in the coming days, and has been the subject of much debate in recent months.
Under the changes, the tax will apply to all diaper sales over $100, with an exemption for small businesses, who are allowed to sell under a smaller tax bracket.
It will also see a 30 per cent discount on all diaper purchases of over $400.
For diaper makers, the discount is set at 15 per cent, while the retailer rebate is set to be reduced to 20 per cent.
There is also a 50 per cent cut on the wholesale price of all diapers.
A spokesperson for the Australian Competition and Consumer Commission told the ABC the new tax rules are expected to reduce prices in Australia, but the changes will only be rolled out for consumers in 2019.
“The Australian Consumer Law (ACL) was designed to help consumers who purchase disposable diapers, including those with disposable diapers as a means to save money,” the spokesperson said.
“[The] legislation is designed to make sure consumers are able to use their disposable diapers for whatever the reason, whether it’s a health or financial need, or for any other reason.”
Under current rules, retailers can only sell a maximum of six pairs of disposable diapers per household, but this will be reduced by 25 per one per household under the new legislation.
Australia is already one of the highest-taxed countries in the world.
This year’s tax will raise more than $500 million over four years, but that is expected decrease to $320 million by 2021-22, when the tax applies to the whole economy.
In 2018, the government cut the top marginal rate for income tax from 35 per cent to 20.5 per cent for the top 5 per cent of earners, and 25 per per cent on the top 10 per cent earners.
Australian consumer groups say the new rules will put a squeeze on some families, with some people forced to choose between paying the GST and buying diapers, while others are left with no choice but to pay.
As of January 1, diaper sales will cost retailers a total of $2.5 billion more in 2019 than they would have if the changes had not been introduced, the Australian Retailers Association said in a statement.
But the AAP also said it believes the tax changes will help many families.
Advocates say the tax cuts are important to ensuring Australia is one of only two countries in Europe that does not tax diapers.