Key Points
- While the price of coffee sold by cafés includes a GST, packed coffee beans, coffee mixes and coffee pods typically sold by larger companies are GST-free.
- Café owner Rejoice Thomson says not only are customers visiting them less, they have to contend with large GST debts to the ATO.
- Café owners in QLD met for a Coffee Commune round-table session to talk about suggestions and solutions they can present to the local, state and federal government.
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Australian cafe owners call for coffee GST removal amid rising cost of living
SBS Filipino
11/09/202411:14
Coffee-loving Australians could soon be deliberating on this brutal question due to the challenging economic environment, inflation and, a mandatory 10 per cent goods and services tax (GST) on ready-made coffee.
'We can't compete'
"It's unfair. We can't compete with large corporations. Only small business owners like us have to charge GST," Dovetail On Overend café owner Rejoice Thomson says.
Dovetail On Overend Owners, Rejoice and Adam Thomson Credit: Rejoice and Adam Thomson
For every $6 cup of coffee, the GST is 55 cents. That’s how much we have to put aside for every cup we sell to pay our quarterly GST bill, and it's not enough.Rejoice Thomson, café owner
"Most cafés like ours go through a payment plan with the ATO and that is not uncommon —especially because business has been challenging nowadays.
"Currently, there are around 26,500 cafés in Australia. One in 30 cafés — nearly 3,000 cafés — owe more than $100,000 to the ATO," she says.
Earlier this year, the ATO said that collectible debts have passed $50 billion. Two-thirds of those debts are owed by small businesses.
"We simply aren't able to pay every GST bill on time because business has slowed down.
With inflation and everything costing so much, people are spending less. When they do spend, they want more for less.Rejoice Thomson, cafe owner
— and the prepacked coffee they use, like the beans or pods, are GST-free."
Thomson admits that the decade-old café she owns with her husband Adam has been going through a challenging year, with earnings not being enough to pay their bills, wages and suppliers on time.
"There needs to be a change in regulation, in planning...not just with cafés, but with all other small businesses as well."
A vital industry 'on survival mode'
More than just a staple, coffee is part and parcel of Australian life, with Thomson saying that more should be done for a vital industry that is currently "on survival mode".
"A record number of cafés have closed down during the last year, and it isn't slowing down," she says.
Wanting to keep their doors open, the Thomsons, along with other café owners in their community, met for a Coffee Commune round-table session to talk about suggestions and solutions they can present to the local, state and federal government.
There were so many great suggestions put forward, especially around local government red tape and policies that affect cafés — such as limits imposed on the working hours of international students, who we employ. Issues such as this has worsened our staff shortages.Rejoice Thomson, café owner
"We talked about café zoning. It was highlighted that our council currently has no means of limiting the number of cafés in a particular small area.
"We all agreed that there should be more favourable conditions that will allow us to be more profitable."
'That 25 per cent can keep us open'
One way the QLD government has tried to alleviate the stress on café owners is to by offering $650 electricity rebates.; but Thomson says that a better way of assisting them is by removing the GST from the coffee they sell.
Nearly everything we sell must have a GST component. This means that nearly 10 per cent of every dollar we earn goes to the ATO, before we pay any other bills or our wages.Rejoice Thomson, café owner
"With the recent massive rises in cost of living expenses, everything now costs us more; but this also coincided with a reduction of demand as customers reduced their spending at cafés."
Thomson explains that 25 per cent of their income comes from coffee sales; and the rest are from food and other products sold.
By making 25 per cent of our income — which is coffee sales — GST-free, then it might just be enough to stop us from accumulating more ATO debts. We are then able to pay our bills and keep our doors open.Rejoice Thomson, café owner
"If we can make changes in this area, and the government allow cafés to be profitable again, then our amazing Australian coffee culture will remain strong."
