Tax avoidance activity is hitting record levels in the PC industry, according to a veteran Queensland dealer. Ray Shaw, president of Intermedia Computers, of a $12 million group of companies that include both PC retail and wholesale businesses, says the amount of tax avoidance is "incredible".
"Every day we get companies offering us boards at ex-tax prices on which they say the tax is already paid. When we ring the manufacturer with the serial number, we're told it was sold ex-tax for about five dollars less than it was offered to us. So the middleman is basically making five dollars a board by avoiding the 22 per cent sales tax," he said.
Driving the jump in tax avoidance behaviour is the pain being inflicted by a slumping market.
"People are trying to win market share on price and the only way they can do it is by fiddling their sales tax," Shaw said. The traditional end-of-year buying spree has evaporated because of uncertainty among government purchasers at both the State and Federal level and pre-budget jitters in the corporate community, he said.
The retail PC arm of his own group has been forced to lay off two staffers and cut budgets to fit sales for the first time in six years. "Everyone is feeling the pinch and only those who are avoiding sales tax are making any money," Shaw said.
Shaw says he has complained about the situation to government officials only to be told: "We are aware of the problem but just don't have the resources to do anything." Making it harder for tax officials, some companies were buying equipment tax exempt in one State and shipping it to a neighbouring State before selling it as a tax inclusive item, Shaw said.