The people’s watchdog has warned that an obsession with reducing the current low-value threshold from $1000 is distracting from the real reasons Australians are shopping online overseas.1
“Our recent research into IT pricing showed differences of more than 50% between what Australian and US consumers pay for identical products,” says CHOICE head of campaigns, Matt Levey.2
“The idea that the 10% GST is the main factor pushing Australians away from local retail is absurd.
“We want a level playing field for Australian retailers, but we don’t support knee-jerk calls to change GST rules without evidence that the benefits will outweigh the costs,” Mr Levey says.
CHOICE says the Taskforce has set out an approach for collecting GST on lower-value imports that would require substantial changes, investments and international agreements over time.
“The reason we don’t collect tax on imports under $1000 is the basic principle that you shouldn’t spend more collecting a tax than you raise in revenue,” Mr Levey says.
“In the last 24 hours we have heard claims that overseas online retail, currently estimated at just 2% of all sales, is threatening more than 33,000 Australian retail jobs and depriving the states of revenue for teachers, nurses and police.”
“Our emphasis should be on improving the efficiency of parcel processing, collecting the GST cost-effectively and reducing the price divide faced by Australian consumers.”
1. For example, see Productivity Commission, (2011), Economic Structure and Performance of the Australian Retail Industry, no. 56 [emphasis added]: “the exemption from payment of GST and customs duty on goods valued less than $100 is not the main factor affecting the international competitiveness of Australian retailers… Indeed the issue of the level of the LVT may bedistracting attention from more fundamental issues facing the retail industry arising from their increasing exposure to international competition”
Read more on CHOICE’s research into IT pricing, including its full submission to the IT Pricing Inquiry.