As the phenomenon of the sharing economy grows it will be good for consumers and jobs, but a headache for the federal government as tax receipts are eroded.
The sharing economy – or the more wordy online peer-to-peer platform – has made household names of Airbnb and Uber as people seek cheaper and more convenient accommodation and travel.
Research released by the Grattan Institute on Wednesday calculates ride-sharing businesses such as Uber can cut at least $500 million a year from Australians’ taxi bills, while providing flexible work for drivers.
Other activities will provide work and income for many thousands of people, while operations like Airbnb puts thousands of under-used homes to work.
“It will increase output and income because any time you make the market economy more efficient you boost output,” the institute’s Jim Minifie told AAP.
As more people find work through online service platforms it will increase taxable income, as well as government tax revenue.
Unlike the black economy, where cash-in-hand is the norm, transactions in online services are usually done electronically and where the Australian Taxation Office has a high visibility.
However, Dr Minifie does not believe increased personal tax receipts will offset a subsequent decline in GST and corporate tax revenue as the sharing economy grows.
While small operators might displace the business of traditional larger firms, they will likely fall below the GST registration threshold of $75,000 for everything other than car sharing which, like taxi drivers, pay GST on the first dollar earned.
At the moment, the ATO is treating accommodation through Airbnb as a residential rent rather than a hotel stay, which does attract GST.
However, anyone who rents out a room in their main residence would be liable for capital gains tax when they sell the property.
A growing sharing economy will also force the government and the ATO to intensify efforts in cracking down on multinationals using tax avoidance schemes with services platforms being run by large international companies.