Retailers outraged over tax hike as Myer weathers backlash for levy comments

Retailers are up in arms about the federal government’s new Medicare levy announced yesterday, saying it will limit consumers’ discretionary spending and impact confidence.

But Myer chief executive Bernie Brookes is already receiving harsh customer backlash over his comments regarding the levy.

Some users have pledged to stop shopping at the store, sparking the Twitter hashtag #BoycottMyer, and forcing Myer to post a statement on its Facebook page.

Prime Minister Julia Gillard announced yesterday a plan to raise the Medicare levy by 0.5% to 2% from July 1, 2014, in order to fund the National Disability Insurance Scheme. Business groups have already publicly expressed their disappointment – especially as confidence is just beginning to improve.

Chief executive of the Australian Retailers Association Russel Zimmerman told SmartCompany the increase would impact retailers.

“It’s our view that once there is a levy or an increased tax put on people, this removes more of their discretionary spending funds,” he says.

“For people making $50,000 a year, the Medicare levy would cost them around $300. This impact on consumers will have an impact on retailers.”

Zimmerman says the NDIS could have been funded without imposing further costs on Australia and the government needs to “look closely” at its own expenditures and “find savings from within”.

“A lot of the funding is not needed immediately and the government could have found a way to produce the savings.”

“This isn’t even going toward funding the budget black hole. They need to look closely at their own spending,” he says.

Yesterday, Myer chief Brookes said at a Macquarie conference in Sydney the Medicare levy would impact consumer sentiment and negatively affect spending behaviours.

“Remember a lot of our customers have equity portfolios, they’ve got superannuation and they get the bills each week and suddenly the Medicare levy costs them another $300 from July next year and that’s $300 they might have spent with us,” he said.

Following these comments, consumers took to social media to respond, with many expressing their anger over the comments.

Myer took to Facebook to issue a clarification of Brookes’ comments and said in a post that it supported the NDIS, but thought the funding should come from government savings.

The post reads: “Thank you all for your Facebook posts and messages. To clarify comments made yesterday, like everyone we are absolutely supportive of any well-constructed support for those with disabilities and that view seems reflected across the community.

“As a business however, we remain sensitive to imposts on the consumer by the government generally, for whatever purpose, as this adds to negative consumer sentiment and that adversely impacts sales, profit and jobs.”

Rather than quelling social media users, this statement provoked further outrage from the company’s Facebook community.

Retail expert David Gordon told SmartCompany it can’t be determined whether or not the Medicare levy will have a noticeable impact on consumer spending.

“Whether the increase is substantial enough to really affect people’s buying behaviour is yet to be understood. But there probably is justified cause for concern.”

“It will impact the lower income groups the most, but it probably won’t affect the younger people that much,” he says.