State Governments join push for lowering GST import threshold

Previously the retail world has had some debate about overseas purchases under $1000 not having to have GST charged to them – this has been labeled unfair and giving overseas sellers an advantage over a struggling local industry. The government was lobbied by the ARA and a productivity commission report found that the cost to collect the tax under the threshold was higher than what would be collected – hence no point in doing so. Many thought that would be the end of the debate; but lately a new way of presenting the argument has occurred with state premiers and state treasurers saying the extra GST collected by lowering the threshold would be much needed money for hospitals, schools and police. No doubt it would – but if it costs too much to collect – is it worth it?

cash 300x290 State Governments join push for lowering GST import threshold

The change of tact and push for the change from a new point of view is particularly interesting – as before this loophole has been viewed as being damaging to retail and the cause of job loses as well as store closures. The statistics do not back these claims however, with online sales equating to just over 6% of total retail, and of that 6% of total sales – no more than 30% goes overseas according to the most recent NAB Online Retail Index. Effectively making it a little under 2% of total retail previously alleged to be undoing the whole industry – my daughter in prep can probably workout that overseas sales aren’t ruining the retail game locally.

Recently state governments in Queensland, New South Wales and Victoria have had to make cuts and break election promises to try and balance the budget books; some may blame previous governments for leaving the incumbents with budget black holes and over spending – but that argument doesn’t sit well with voters anymore, blaming others is over, leadership and direction is needed. So it is little wonder that these three state treasurers have all agreed that by closing the GST ‘loophole’ and charging GST on imports as low as $30 – is the way to help solve the problems. The retailers and their associations who are no doubt behind this new change of tact; also make a political football out of the issue – having three Liberal treasurers call for the Labor federal Government to make a change – and I thought blame games might be over.

The simple facts are that changing the Low Import GST threshold to $30 from $1000 will cost too much money for what it will collect. It also fails to recognise the influence of the high AUD on the popularity of overseas sites, as well as the lack of local options for consumers locally. As local options improve online – so to will their market share – research shows us that Australian consumers prefer buying from a local seller; preferring no currency conversion fee, no potential additional bank fees, not waiting for the item, an ability to return and better service offerings locally – remember service, one of the cornerstones to retail success. If we were to put in place the collection teams needed for GST; even if they lost money today – they would loose more in the future as the variety of choice improves locally and the AUD value changes.

The other point about the GST threshold is that even if it were affordable to lower the collection value to $30 – will this make a much of a difference to the popularity of products from overseas in the he short term. I would argue not; adding 10% to overseas prices still leaves those products generally speaking cheaper than local options. So then what is the next move for local retailers?

There are other loopholes to GST collection that need to be explored – and very few people are mentioning them; one being the lack of GST on fees for major online players such as eBay and Google – vast sums of money are spent with these two online giants and no GST is collected by either company as they conduct their billing offshore, despite the service having been delivered locally.  The lack of collection by these two companies in particular adds further annoyance for the small to medium businesses who deal with them as they are unable to use the GST credits against what has been collected on the quarterly BAS statement.

The collected money from GST on eBay fees and Google advertising may or may not be as high as what is projected to be collected from overseas online sales; but it would be a lot easier and cheaper to collect. I am hoping that when the state treasurers for new avenues to increase the states coffers and local retail associations look for new ways to help local retailers – they realsie this loophole and bring this to the attention of the wider public.

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  • wp socializer sprite mask 32px State Governments join push for lowering GST import threshold
  • wp socializer sprite mask 32px State Governments join push for lowering GST import threshold
  • wp socializer sprite mask 32px State Governments join push for lowering GST import threshold
  • wp socializer sprite mask 32px State Governments join push for lowering GST import threshold
  • wp socializer sprite mask 32px State Governments join push for lowering GST import threshold
  • wp socializer sprite mask 32px State Governments join push for lowering GST import threshold
  • wp socializer sprite mask 32px State Governments join push for lowering GST import threshold
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