Convenience retailers 7-Eleven and Caltex took weeks to fully reduce prices on menstrual products after they were exempted from GST at the start of 2019 and did so only after being hassled by the ACCC.
The companies blamed internal errors for charging thousands of dollars in incorrect taxes during January, the consumer watchdog revealed on Friday afternoon.
Treasurer Josh Frydenberg announced the menstrual product GST exemption in late-2018, after years of campaigning from advocates who dubbed it a “tampon tax”.
It was the first major removal of a broad category of products from the GST program in its history, leading to an expected 9.1% decrease in prices across the market, the ACCC said.
But while most retailers reduced prices immediately, some of Australia’s largest traders struggled.
7-Eleven blamed a combination of human and technical error for a three-day delay in implementing the GST change, while a further issue prevented subsequent price decreases from completely going through for several weeks.
It took until January 19 for prices to fully reflect the changes, resulting in $8763 in extra revenue for the retailer.
A 7-Eleven spokesperson said the company “recognises the seriousness” of its error and has made a $9,000 donation to charity to ensure the company didn’t profit from the mistake.
“Due to an inadvertent administrative error, 7-Eleven neglected to remove the GST from feminine hygiene products sold in its stores until 4 January 2019. Regrettably, the alteration of the tax classification at that time did not automatically result in a corresponding decrease in the recommended retail price of the products, which was identified and corrected 15 days later,” the spokesperson said.
“7-Eleven has sought to improve its internal systems to ensure future tax changes are implemented correctly.”
The ACCC had to issue notices to both 7-Eleven and Caltex before the errors were rectified, although the watchdog noted retailers weren’t legally obligated to reduce prices.
Caltex said it had prepared its systems for the GST changes weeks before the implementation date, but erred in actually updating its prices, which were eventually changed on February 1.
Grocery wholesaler Metcash was also singled out by the ACCC for failing to properly implement price reductions in four stores until early February, due to a combination of system issues and human error identified after the ACCC started asking questions.
The watchdog also said it is currently in talks with online retailers based overseas who are likely still purporting to collect GST on menstrual products.
Other retailers reduced or even increased prices in the wake of the change. Chemist Warehouse Online, ePharmacy Online and My Chemist Online prices ranged from a 6.68% increase to a 25.13% reduction, according to price comparisons between 27 December 2018 and 14 January 2019.
The pharmacy group said a re-assessment of pricing following the change and a rounding system which dictates prices end in a ‘9’ resulted in the price fluctuations.
The majority (65%) of its products were reduced in price by 8.5% or more, the ACCC said.
This story was updated at 11:30PM AEDT March 29 to clarify when 7-Eleven implemented the GST changes.
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