Walmart Australia has been hit with a massive tax bill as the paper and postal industries in the country face a devastating slump.
But it will have a new financial incentive to keep printing more.
The company announced a plan on Thursday to double its output of paper products to 1.4 million boxes per week by 2020, from 600,000 boxes a week in 2020.
The increase comes on top of a 2.6 per cent increase in its profits over the same period.
The plan is expected to boost its quarterly profit by nearly 10 per cent, according to a research note prepared by the company.
Walmart said it was “disappointed” that the paper industry had suffered such a severe downturn.
It said the plan would allow it to boost revenue by more than $2.3 billion over the next five years.
The announcement came amid growing calls for a change to Australia’s paper industry’s tax treatment.
A proposal by the Australian Competition and Consumer Commission (ACCC) to reform the tax regime around retail paper was rejected by the Federal Government in September last year.
The government is now reviewing the matter.
The government’s plan to tax retailers and distributors of paper would be aimed at ensuring consumers pay for their products on a “basis” of the paper they buy.
That would be a change from the current tax system which has traditionally relied on “fixed” pricing for all products.
In other words, if you buy a book or a video game, you will pay a fixed price.
But the Australian Government’s paper tax proposal would see retailers pay a lower rate on all products to encourage them to produce more paper.
It would be introduced to replace the current paper tax which is currently set at 20 per cent of a business’s gross revenue.
“The introduction of a tax on paper products would reduce retail paper consumption, and would reduce the impact on the paper market,” the report from the Australian Paper Industry Association said.
Read moreWhat’s happening to Australian Paper?
The ABC has learned the Australian Postal Union has called for the Australian Retail Consortium to review its pricing structure and move towards a “fair” pricing model, as well as the Australian Centre for Business and Economics to lobby for the change.
In addition, the postal unions said they would be pushing for an independent review of the tax system by the Commonwealth Auditor-General.
Walmart’s announcement comes at a time when many in Australia are calling for the country’s paper industries to be taxed more heavily.
A report published in July by the Business Council of Australia, the Australian Chamber of Commerce and the Australian Industry Group called for changes to the tax treatment of paper.
They called for a tax to be charged on all paper goods, but a lower tax rate to encourage companies to invest in making more.
Many in the industry believe the current system has failed to encourage more companies to move to digital delivery.
On Wednesday, the Federal Cabinet announced that it was moving to introduce a levy on all companies in the paper sector to boost investment in new paper production facilities and to raise money for infrastructure and support services.
It said the levy would be implemented from July 1, 2020, and that companies could choose to pay a 10 per-cent tax on sales.
As well as raising cash for infrastructure projects, the levy will also be used to improve Australia’s relationship with overseas customers.
Australia Post is a big player in Australia’s retail sector, accounting for nearly 10.3 per cent.
However, the company has been struggling to recover from a massive $12 billion cash injection by the federal government in 2017.
The Australian Competition Commission (ACC) has called on the postal services to be treated more like traditional retailers, and is now considering a number of proposals including a proposal to tax all products in a way similar to how the US Postal Service is taxed.
While Australia Post has been fighting to recover, it has also had to take steps to maintain the integrity of its supply chain.
This year, the organisation’s board of directors said it had been able to increase its workforce by 3,000 people, but this has been offset by cuts to some of its key suppliers and reduced revenues from a major contract to supply Australia Post with 100 million postcards.
ABC News’ Andrew White in Canberra and ABC Fact Check’s Dan Baker in Melbourne contributed to this story.